Crude oil futures advanced by almost 6 per cent in the domestic market on Monday as investors and speculators booked fresh positions in the energy commodity tracking a bullish trend in the overseas market amid bets that a production freeze by some OPEC members and Russia may help ease a global supply glut.
The IEA said that it sees an oil supply and demand rebalance by 2017, forecasting a drop in US shale production by 600,000 barrels per day this year.
Meanwhile, a pickup in Chicago factory activity eased concerns over a slowdown in the world's biggest economy, lifting the demand outlook for the fuel. The Chicago Fed National Activity Index (CFNAI) rose to 0.28 in January from -0.34 in December, with a reading above 0 signaling expansion.
However, a gauge of US manufacturing tumbled to the lowest level since October 2012 at 51 in February from 52.4 in January, with a reading above 50 signaling expansion.
Oil may drop today as Monday's stellar rally paves way for profit booking.
At the MCX, Crude oil futures, for the March 2016 contract, closed at 2,329 Rs per barrel, up by 5.72 per cent, after opening at 2,220, against the previous close price of Rs 2,203. It touched an intraday high of Rs 2,335.