* Goldman lifts energy view to neutral from underweight
* Goldman warns rally may be premature
(Adds settlement prices)
By Devika Krishna Kumar
NEW YORK, April 22 (Reuters) - Oil prices rose on Friday and
notched their third straight week of gains as market sentiment
turned more upbeat amid signs a persistent global supply glut
may be easing.
Strong gasoline consumption in the United States, increasing
signs of declining production around the world and oilfield
outages have underpinned a return to investment in the sector,
traders said.
"The current rally is driven by a market sentiment that is
becoming more and more convinced that the worst is over and the
global oil market rebalancing process is already in play," said
Dominick Chirichella, senior partner at the Energy Management
Institute in New York.
Brent futures LCOc1 ended the session up 1.3 percent at
$45.11 per barrel, while U.S. West Texas Intermediate CLc1
crude settled up 1.3 percent at $43.73 a barrel. Both contracts
jumped as much as 3 percent during the session.
The rally was limited by profit taking ahead of the weekend,
brokers said.
Brent has surged 4.5 percent this week and U.S. crude 8.4
percent as both benchmarks notched a third week of gains. Crude
is up more than two-thirds since its 2016 lows between January
and February.
Traders also pointed to strong crude imports to China in
March as supporting prices.
Still, some analysts warned that the oil market was still
far from balancing supply and demand.
"While this recent rally has the potential to run further to
the upside ... we believe that it is not yet driven by a
sustainable shift in fundamentals," Goldman Sachs (NYSE:GS) said in a note
to clients.
The Wall Street bank maintained its view that a sustainable
balancing of the market, driven by declines in U.S. shale oil
production, would take place in the third quarter.
Many analysts have said they expect producers in the United
States to take every opportunity to aggressively hedge by
selling as soon as oil prices recover for short periods of time.
This would have a tendency to pressure prices in later months,
which could in turn limit front-month gains.
Sure enough, EOG Resources (NYSE:EOG) placed hedges for nearly 10
million barrels of crude oil in the first quarter through June
30, according to a regulatory filing this week.
Falling output, especially in the United States, where many
producers have reeled from an up to 70 percent oil price rout
since mid-2014, has helped to lift the market.
U.S. energy firms cut oil rigs for a fifth week in a row to
the lowest level since November 2009, oil services company Baker
Hughes said on Friday.
French investment bank Natixis said it expected U.S. oil
production to drop by at least 500,000 to 600,000 barrels per
day (bpd) this year, compared with 2015, and by another 500,000
bpd in 2017.
Despite the recent rally, oil markets remain oversupplied as
between 1 million and 2 million barrels of crude are being
pumped out of the ground every day in excess of demand, leaving
storage tanks around the world filled to the brim with unsold
fuel.