Oil prices rose more than 3 percent on Tuesday as higher seasonal demand in developed economies and expectations of falling U.S. shale production reduced the impact of a large global supply overhang.
In its short term energy outlook, the U.S. Energy Information Administration raised its 2015 crude oil production growth forecast to 690,000 barrels per day (bpd) from 530,000 bpd, but lowered 2016 production by 160,000 bpd vs 20,000 bpd growth previously.
Meanwhile, it raised its 2015 U.S. oil demand growth forecast to 380,000 bpd vs 340,000 bpd seen last month, and left unchanged its 2016 demand growth forecast to 70,000 bpd.
Front-month U.S. crude closed up $2.00, or 3.44 percent, at $60.14 a barrel, after ending the previous session down 99 cents. Brent for July delivery was up $2.40 to $65 a barrel, having settled down 62 cents in the previous session.
Demand for oil tends to increase in the summer months as drivers take to the roads for holidays in Europe and the United States. This has helped to lessen the impact of a growing glut in supply that has led to tankers storing oil at sea.
"There is currently seasonal demand for oil, so there is less of a build in crude oil stocks," said Olivier Jakob at Petromatrix in Zug, Switzerland. "But there is still too much oil for the rally to take hold."