Oil rose for a third straight session yesterday as Opec forecast greater demand for crude this year than previously thought and projected less supply from countries outside the group.

The Organisation of the Petroleum Exporting Countries forecast demand for its oil will average 29.21 million barrels per day (bpd) this year, up 430,000 bpd from its previous forecast, while slashing its outlook for crude supply growth in non-OPEC countries.

Data last week showing the US oil rig count at a three-year low also bolstered prices, which were attempting to find a floor after a brutal sell-off in crude that wiped out over half of the market’s value since June.

Both US crude and Brent have gained nearly 20 per cent since a January 29th rebound inspired by better confidence in the crude supply outlook following a seven-month-long sell-off that halved prices. Some traders were pessimistic though that the rally will last.

Citigroup said in a note that US crude could fall well below $40, “perhaps as low as the $20 range for a while”. – (Reuters)