Oil Extends Gains as Market Seen Heading Toward Balance

Oil Extends Gains as Market Seen Heading Toward BalanceOil Extends Gains as Market Seen Heading Toward Balance

Oil prices rose on Monday following comments from the Saudi energy minister that the market was heading toward balance, although signs of slowing demand in Asia became evident.

Brent crude futures were trading at $50.58 per barrel on Monday, up 23 cents from their last settlement. US crude was up 17 cents at $49.16. US markets were closed on Monday for the US Independence Day holiday, Reuters reported.

Khalid al-Falih, energy minister of Saudi Arabia, and Secretary-General of OPEC Mohammed Barkindo agreed that global oil markets were heading toward balance, and that prices reflect this.

However, analysts at Morgan Stanley said there were also signs that prices could fall again soon, pointing at stalling gasoline demand and improving output in Canada and Nigeria.

The Nigerian National Petroleum Corporation said last week that output was rising, following repairs after attacks in the Niger Delta that had pushed Nigeria's crude output to 30-year lows.

A deal to unify Libya's rival national oil corporations could pave the way for the OPEC member to boost output that currently stands at less than a quarter of pre-2011 levels of 1.6 million barrels per day.

Oil demand and, as a result, prices could come under pressure as weak margins prompt run cuts at a time when refineries in Asia are already gearing up to enter their maintenance season.

"Asia refiners have already started to pull back ... and there are reports of cargoes struggling to sell," they added.

Investors are also watching the outlook for US production, with drillers last week adding oil rigs for a fourth week in five, in the best month of producers returning to the well pad since August 2015.

In Norway, oil workers signed a deal on Saturday and prevented a strike in Western Europe's top oil producer.