Oil prices eased off somewhat on Monday despite commentary from OPEC that production from non-members is slowing.
Comments from the oil producers' cartel comes after data last week from the United States that showed a further reduction in the number of active drill rigs as well as a downgrade to forecasts of US output for 2016.
“The rebound in oil prices can largely be explained by an improvement in sentiment toward demand and mounting evidence of cuts in non-OPEC supply,” said Julian Jessop, head of commodities research at Capital Economics.
On the demand side, the economist highlights that concerns over China have eased and the outlook for US interest rate rises have improved; meanwhile, the supply-side situation has been supported by hard evidence of production cuts in response the previously weakened prices.
At the same time Jessop says there has also been a new dimension to the uncertainties in the Middle East, due to the escalation of Russia’s military involvement in Syria, though he describes it as “a potential wildcard” rather than a key driver of the oil price.
In London today, Brent Crude was down nearly 1.6% to US$51.85 whereas West Texas Intermediary futures were down 1.8% to US$48.75 per barrel.
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