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Oil edges up, but US drilling drags on prices
[TOKYO] Oil prices rose on Monday, but gains were minimal as investors gauged whether an increase in US drilling and record stockpiles would undermine efforts by producers to cut output and bring the market into balance.
Brent futures were up one US cent at US$55.82 a barrel at 0050 GMT, while US West Texas Intermediate crude rose 3 US cents to US$53.43 a barrel.
US 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 crude prices, which have traded mostly over US$50 a barrel since late November.
The Organization of the Petroleum Exporting Countries (Opec) and other producers, including Russia, agreed last year to cut output almost 1.8 million barrels per day (bpd) during the first half of 2017.
Estimates indicate compliance with the cuts is at around 90 per cent, while Reuters reported last week that Opec could extend the pact or apply deeper cuts from July if global crude inventories fail to drop enough.
But rising US output helped boost crude and gasoline inventories to record highs last week, amid faltering demand growth for the motor fuel.
Hedge funds and other money managers raised their net long US crude futures and options positions in the week to Feb 14 to a new record high, data from the US Commodity Futures Trading Commission (CFTC) showed on Friday.
The increase in long positions leaves the market vulnerable to a downward correction, analysts have said.
The US market will be closed on Monday for the Presidents Day holiday.