Vienna: A recovery in oil prices which began last month is not justified by fundamentals as there remains a supply glut in the market, the Organisation of the Petroleum Exporting Countries (OPEC) said on Monday in its monthly report.
Crude prices rallied about 20 per cent in February, ending a losing streak lasting about eight months in which prices collapsed by 60 per cent. Oil cartel OPEC, however, warned that prices picked up even though there was still an oversupply of almost one million barrels a day on the market.
"ICE Brent and Nymex WTI crude oil futures defied fundamentals and moved up sharply, posting their first gains since June 2014 after seven months of a declining streak that ended with values down by almost 60 per cent," the OPEC report noted.
This is "despite the fact that global supply continued to exceed demand", OPEC said, as it left its supply forecast unchanged at 92.4 million barrels a day for 2015.
OPEC's assessment came after the International Energy Agency issued a similar reading on Friday.
IEA's warning that the rebound in oil prices is built on flimsy foundations sent crude prices sliding.
Oil prices extended their losses on Monday, with the US benchmark West Texas Intermediate for April delivery dipping as low as $43.57 a barrel before recovering slightly to stand at $44.44, while Brent North Sea crude for April fell 79 cents to $53.38 a barrel in midday London trade.
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