Oil prices rose on Monday, reversing earlier losses, as investors latched on to positive supply-side drivers for the market, although concern about the wider economy simmered in the background after data pointed to a slowdown in China.
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Brent crude oil futures were up 12 cents at $62.82 a barrel by 1520 GMT, while U.S. crude futures were up 9 cents at $53.89 a barrel.
Analysts said a more robust backdrop for financial markets, together with the prospect of slower crude production growth, were the major drivers behind the rally in oil.
"The stock market performance is one of the reasons why oil keeps marching higher. There also seems to be a general belief that the agreed cut in OPEC+ production will be sufficient to balance the market," PVM Oil Associates said in a note.
Global equities fell after data pointed to a slowdown in Chinese economic growth in 2018 to a 28-year low. The numbers fed concern that the outlook for global growth may be darkening, particularly given U.S.-China trade tensions.
But stocks are still up nearly 8 percent so far this month, which in turn has given oil investors more confidence to bet aggressively on a rise in crude prices.
"It remains quite likely that the trade spat with the U.S. has played a part in this latest slowdown," CMC Markets chief market analyst Michael Hewson said.
"But investors should also factor in that it simply isn’t possible for the Chinese economy to grow at the pace that it has over the last 10 years, in the next 10 years."
While there is concern that a slowing global economy could impact oil demand, production cuts implemented by the Organization of the Petroleum Exporting Countries are likely to support crude oil prices, analysts said.
"You can't justify oil prices at these levels. We're looking basically at an average of almost $70 a barrel for Brent in 2019," ING commodities strategist Warren Patterson said.
"I am getting increasingly concerned about how tight the market will be going into 2020."
A separate report from China's National Bureau of Statistics on Monday showed crude oil refinery throughput in 2018 climbed to a record 12.1 million barrels per day (bpd), up 6.8 percent from the previous year.
In the United States, energy companies cut the number of rigs drilling for oil by 21 in the week to Jan. 18, taking the count down to 852, the lowest since May 2018, energy services firm Baker Hughes said on Friday.
(Additional reporting by Henning Gloystein in SINGAPORE; Editing by Dale Hudson and Louise Heavens)