Front-month Brent crude futures were trading at $39.20 per barrel at 0127 GMT, up almost half a dollar and over a percentage point from their last settlement.
Oil prices opened strongly on Monday after rallying in the previous session, supported by tightening supply and strengthening sentiment around a market recovery.
Front-month Brent crude futures were trading at $39.20 per barrel at 0127 GMT, up almost half a dollar and over a percentage point from their last settlement. That is almost a third above 2016 lows from mid-February, when prices hit levels not seen since 2003.
US West Texas Intermediate (WTI) futures were trading at $36.36 a barrel, up 44 cents and from their last close and 40 percent above February lows.
“US shale producers continue to pull rigs from the ground in an effort to conserve capital,” ANZ bank said on Monday.
US energy firms last week cut oil rigs for an 11th week in a row to the lowest level since December 2009, data showed on Friday, as producers slashed their drilling rig count to focus on uncompleted wells amid low oil prices.
Drillers removed eight oil rigs in the week ended March 4, bringing the total rig count down to 392, oil services company Baker Hughes Inc said in its closely followed report.
Beyond a tightening supply outlook, ANZ said that a shift in sentiment was also pushing prices as traders shut down short positions that had bet on further falls in prices.
“Short-covering in commodities continues to push prices higher. This week’s slew of economic data releases in China, however, will determine if this rally continues,” the bank said.
BMI Research, a subsidiary of ratings agency Fitch Group, said that “the next four to six weeks will mark the inflection point”, but added a cautionary note in saying that “bloated crude inventories and seasonally softer demand” also posed a downside risk to prices.
The company said that it expected Brent and WTI to average $40 and $39.50 per barrel respectively in 2016.