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Expectations of a rebound in demand for oil in the latter half of the year sparked a rally in crude oil prices early Monday following a week of uncertainty.
“Higher oil demand is expected in the third and fourth quarters,” Qatari Energy Minister and President of the Organization of Petroleum Exporting Countries Mohammed bin Saleh al-Sada said in a statement.
Crude oil prices dropped more than 3 percent during trading Aug. 1 as supply-side pressures added to fears the sentiments on balance that helped push oil above $50 in late spring 2016 were evaporating. Concerns about a slowing economy in Asia, sluggish growth in the United States and post-Brexit worries in Europe all added up to a scenario for lackluster demand.
Sada said the market pressures in major markets like Europe were only temporary and demand should increase, especially in countries starting preparations for the onset of winter.
Crude oil prices moved higher at the start of trading Monday in New York, with the price for Brent crude oil up 1.6 percent to open at $45.00 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, gained 2 percent to start trading at $42.65 per barrel.
In a sign that companies were expecting upward momentum, oilfield services company Baker Hughes last week reported gains in U.S. rig activity for the seventh week in a row. An increase of seven to 381 rigs put the U.S. rig count at its highest level since mid-March.
Markets last week were influenced by analyst sentiments on the prospects for a slow, but steady, recovery in crude oil prices. Michael Hseuh, a strategist at Deutsche Bank, told Bloomberg News that recovery is a “very slow process,” though a net average of analyst sentiment gathered by the news agency found oil should settle at around $57 per barrel for next year.
OPEC’s Sada added supply-side pressures could emerge because of an “unprecedented” drop in energy sector spending. The president added the production group was monitoring the market closely and would review the situation at an informal meeting in Algeria in late September.