SINGAPORE - After plunging more than 50 per cent in the seven months since June last year, oil prices have reversed course and are heading up.

The global benchmark, Europe's Brent crude crossed back over the US$58 a barrel level on Monday (Feb 9) to hit US$58.15 by 1305 GMT, surging more than 9 per cent last week, its biggest weekly rise since Feb 2011. Brent has climbed almost 30 per cent since hitting a five-year low of US$45.19 in January.

West Texas Intermediate, the US global benchmark, traded at US$52.44 a barrel on Monday, having gained nearly 18 per cent since hitting a US$44.45 low last month.

So is the oil rout over? Have crude prices hit bottom?

Here's 3 reasons it might be so:

1. The US is losing the oil price war

The oil price plunge from their June peaks was largely owing to a surge in global reserves from a frenzy of US shale oil drilling. Oil cartel Opec responded to protect its one-third global market share by refusing to cut its supply despite prices plunging.

Now ot looks like the US sale boom is going bust.

Oil prices have reached levels where smaller US producters, faced with higher costs and disappearing profit margins, are shutting down their rigs in droves.

Helping this process along is the nature of the new shale revolution. Unlike traditional oil wells, which cannot be turned on and off so easily, shale production can and is being cut back quickly.

A survey by US oil services firm Baker Hughes Inc released Friday (Feb 6) showed the number of rigs drilling for oil in the United States fell by 83 to 1,140 in the week to February 6, after a cut of 94 rigs the previous week.

Bloomberg News reported that the US rig count is now standing at its lowest level since December 2011.

The production drop, coupled with deep cuts in capital spending by a slew of major oil companies from Apache Corp, Conoco Phillips to BP, Shell and Chevron, means tighter oil supplies in the future.

2. Opec raising its demand forecast for its crude

The Organization of the Petroleum Exporting Countries on Monday (Feb 9) raised its forecast for demand this year to 29.21 million barrels per day (bpd), up 430,000 bpd from its previous forecast, saying lower [rices will boost oil consumption.

Opec also slashed its forecast for growth in supply by non-OPEC members to 850,000 bpd, down 420,000 bpd from its previous forecast. It cut the total US oil supply forecast for 2015 by 170,000 bpd because oil prices have forced a large number of drilling rigs to shut down, it noted.

3. Economic recovery in the US, oil's second biggest market, that will drive demand

Predicting that "supply will shrink more rapidly than expected and demand will increase faster than expected," TAC Economics' executive chairman Thierry Apoteker told CNBC that economic recovery in the United States will drive increased demand, he said, predicting that Brent will recover to US$70 per barrel in the first quarter and reach US$90 later this year.

Nicholas Teo, market analyst at CMC Markets in Singapore, told AFP a surprisingly robust US jobs report is supporting prices as it heralds stronger demand. The Labor Department last Friday (Feb 6)reported that the world's biggest economy added 257,000 jobs in January and revised upward already healthy growth in the previous two months.

But will oil rebound to the triple digit levels seen last June?

Here's 3 reasons why that's not likely to happen:

1. The speed of shale production has permanently changed oil markets

Just as faster-reacting shale production allows supply to be cut more quickly than in the past, restoring market balance without a decades-long wait, the availability of so much new oil, housed in easy-to-tap shale formations, could also prevent prices from spiking.

Before US energy companies figured out how to pull oil from shale formations, petroleum projects often took years to execute. But drilling and hydraulically fracturing a well takes weeks, not years.

Given that shale producers can react fster, Citigroup analyst Seth Kleinman argues that any expectations of an early price recovery could actually ward off deep cuts in production, thereby prolonging the oversupply and downward pressure on oil prices.

2. Oil market still has to work through current glut

UBS global commodity analyst Daniel Morgan told CNBC: "We do still have a physical market surplus that's going to be sloshing around in the market for the next 12 months or so. Oil is not going to go back to US$90-US$100 in a heartbeat. But in the longer term, I think it will go back to US$80 in a two to three year view,"

3. Oil companies have huge debts to service

Oil and gas companies may have been slower to cut oil production even as prices plunged because they need to service debt that has risen fourfold since 2003, according to the Bank for International Settlements (BIS). Their outstanding debt has swelled to more than US$800 billion this year from less than US$200 billion in 2003, said BIS in a report on Saturday (Feb 7).

"Debt-service requirements may induce continued physical production of oil to maintain cash flows, delaying the reduction in supply in the market," BIS said.

Citigroup analyst Seth Kleinman argues that any expectations of an early price recovery could actually ward off deep cuts in production, thereby prolonging the oversupply and downward pressure on oil prices.

He thinks oil hasn't even reached bottom: "For the market to truly balance, US oil rig counts would have to fall significantly further and the bottom of the price trading range for 2015 is likely to be a good deal lower."

4. Persistent global economic uncertainty and weak growth

The International Energy Agency (IEA) in its monthly report on Monday (Feb 9) said oil prices will recover only partially from their spectacular lows of last year to US$73 per barrel in 2020, "substantially below the highs of the last three years" because of a lingering hangover from the global economic crisis in 2008 and weak investment.

"Oil price declines against a backdrop of slowing demand growth will not be as potent an economic stimulus as they would be in a context of strong underlying income gains," said theagency, which advises industrial nations on energy policies.

IEA also noted the role that fast-reacting shale plays as a "swing producer" - reducing output in case of excess supplies on the market so that prices stabilise.

"OPEC's move to let the market rebalance itself is a reflection of... how shale oil has changed the market," said IEA Executive Director Maria van der Hoeven.

There is also the trouble with Greece. Analysts say signs of a sharper economic slowdown in China are unlikely to derail the price recovery but they are sounding caution over rising tensions surrounding Greek debt negotiations.

If Greece defaults on its massive debts or leaves the euro zone, the resulting financial upheaval could play havoc with Europe's economic recovery and demand for energy.