Downside price risks for oil are receding as supply restructuring gathers pace, but the market is likely to stay weak for some time.

The bottoming out process is likely to last for a while yet,” Barclays says.

By TZ Business News Staff and Agencies.

World crude oil prices have begun to rise, but bottoming out of the drop seems still far fetched, analysts have said. The prices rose on Monday, 12 October, 2015 after Kuwait’s oil minister said economic growth and the removal of high-cost producers would help tighten global fuel balances.

Global benchmark Brent crude oil rose 50 cents a barrel to $53.15 by 0800 GMT. U.S. light crude was up 45 cents at $50.08.  The figures compare to August prices when Brent fell to a six-year low just above $42 a barrel, down from a peak above $115 in June 2014.

Kuwait Oil Minister Ali al-Omair told Reuters the Organization of the Petroleum Exporting Countries would stick to its output policy, which has focused on building market share at the expense of higher cost non-OPEC producers.

The comments followed data from oil services company Baker Hughes Inc that showed the number of U.S. rigs drilling for oil fell for a consecutive sixth week. Drillers have cut 70 rigs over the last six weeks.

“Bullish rhetoric from OPEC is helping drive prices higher,” said Tamas Varga, market analyst at London brokerage PVM Oil Associates. “Rig count data is also supporting sentiment.”

“Fundamentals factors (of supply and demand) that have weighed on the market for more than a year have persisted, but are starting to show signs of alleviation,” the Organisation of Petroleum Exporting Countries said in its October report.

It hiked its forecast for global demand for oil this year to 92.86 million barrels per day, up from 92.79 million.

OPEC also cut its forecast for oil production by non-members of the group, notably in the Americas.

Since hitting an all-time high of 1,609 a year ago, the number of U.S. rigs operating has fallen by an average of 20 a week as higher cost drillers curb costs due to low prices.

“The current rig count is pointing to U.S. production declining sequentially between 2Q15 and 4Q15 by 255,000 barrels per day,” Goldman Sachs said in response to the data.

Kuwait Oil Minister Ali al-Omair .

The bank said, however, that “a rapid drawdown of the observed backlog of uncompleted wells could lead to higher production later this year and in 2016”.

Barclays said “downside price risks” for oil were receding as supply restructuring gathered pace, but said the market could stay weak for some time.

“The bottoming out process is likely to last for a while yet,” Barclays said, adding that it had cut its 2015 Brent and U.S. crude price forecasts slightly to $54.50 and $50 a barrel from $57.50 and $51.60 respectively.

Oil drew a little support from a weaker U.S. dollar, which makes purchases cheaper for holders of other currencies.

The dollar hovered near a three-week low versus a basket of major currencies, anchored by doubts the U.S. Federal Reserve will raise interest rates by the end of the year.

“Upside (in oil prices) is likely limited, and we continue to see a range-bound market through year-end,” Morgan Stanley analysts said, according to Reuters.