Oil prices, on Monday, February 20, surged but the gains were capped as investors gauged whether an increase in U.S. drilling rigs and record stockpiles would undermine efforts by producers to cut output.
Brent futures (LCOc1) were up 23 cents at $56.04 a barrel at 0750 GMT, while U.S. West Texas Intermediate crude (CLc1) was up 19 cents at $53.59. Both contracts earlier fell slightly in quiet trading.
“Sustained gains above $55 a barrel, and a hoped for rally to $60 a barrel, (are) both proving incredibly tough nuts to crack,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
“At the crux of the matter is that 90 percent OPEC compliance is being balanced by ever increasing U.S. shale production,” he added.
U.S. energy companies added oil rigs for a fifth consecutive week, Baker Hughes said on Friday, extending a nine-month recovery with producers encouraged by higher prices, which have traded mostly over $50 a barrel since late November.
Overall, 2017 U.S. production will rise by an average 130,000 bpd from a year ago, the note said.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed last year to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017.
