Oil prices may have risen since the start of the month, but analysts believe the lackluster outlook for global demand—amid a shaky global growth environment and stubborn oversupply—should be more of a concern for investors.
"One consideration in the near term that we think is going to be more relevant is on the demand side, rather than supply," Marc Kofler, research analyst at Jefferies, told CNBC on Monday.
"We are coming into what we expect to be a heavy refinery maintenance season in the Organization for Economic Cooperation and Development and we would expect that to limit the amount of crude oil that you're seeing being bought by these refineries and that could actually have some near-term negative momentum around the oil price," he added.
Prices have risen more than 10% since the start of the month as speculation has mounted about potential action by oil producer group OPEC when it meets on the sidelines of an energy conference in Algeria next month.
Prices rose tentatively on Monday morning, with Brent crude futures trading at $47.37 a barrel and US West Texas Intermediate at $44.93 a barrel.
Still, there are plenty of reasons to be cautious with the International Energy Agency revising its global oil demand growth forecasts for 2017 downwards last week amid an uncertain global growth outlook with mixed signals from the likes of China and the US.
In addition, comments about potential OPEC/non-OPEC cooperation over market stability have been made in the past to no effect and analysts are again skeptical that OPEC's informal meeting next month will produce any concrete action, as the group remains wary of conceding market share amid signs of more output coming on stream from non-OPEC producers.
Kopler was also skeptical about the forthcoming OPEC meeting: "It's always very difficult when it comes to talking about OPEC and in the past, the precedent has always been for a lot of expectations then perhaps the reality being someway below that."
"We're expecting to be reasonably sanguine around that event, principally because we still hear rhetoric around coordinated action between OPEC and non-OPEC and that feels someway off for us. Secondly, even if there is a production freeze, at current levels recently we've had Saudi, UAE, Kuwait all producing at record levels and so we question how effective any freeze may be," he added.
