Oil halts gain near US$54 as rising US drilling damps Saudi cuts

[HONG KONG] Oil halted its advance below US$54 a barrel as an increase in US drilling countered signs Opec members including Saudi Arabia are sticking to planned output cuts to stabilise the market.

Futures slid as much as 0.6 per cent in New York after rising 3.2 per cent the previous three sessions. US drillers added rigs for the 10th straight week to the highest level in a year, according Baker Hughes Inc.

Saudi Arabia is among Opec producers leading a reduction in supply, the group's Secretary-General Mohammad Barkindo said in an interview with Kuwait's official news agency.

Oil last year capped its biggest annual gain since 2009 as the Organization of Petroleum Exporting Countries and 11 other nations agreed to curb output starting Jan 1 in an effort to trim a global inventory glut. While producers from Iraq to Kuwait say they have started to curb supply, an increase from countries such as Libya - exempt from cuts - could put pressure on prices.

"The oil market has found a temporary equilibrium point and appears content to sit around that level at the moment," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "We are getting anecdotal evidence of Opec production cuts and that's enough to hold the market firm."

West Texas Intermediate for February delivery slid as much as 33 US cents to US$53.66 a barrel on the New York Mercantile Exchange and was at US$53.79 at 10:51am in Hong Kong. Total volume traded was about 69 per cent below the 100-day average. The contract rose 23 US cents to US$53.99 a barrel on Friday to cap a fourth weekly gain.

Brent for March settlement lost as much as 29 US cents, or 0.5 per cent, to US$56.81 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of US$2.28 to March WTI.

US drillers boosted the rig count by 4 to 529 last week, according to data Friday from Baker Hughes. It's the highest level since the week ended Jan 1, 2016. Companies have added more than 100 rigs since the end of September.

In other oil news, the Niger Delta Avengers will resume attacks on Nigerian oil facilities, a spokesman for the group said in a statement on a website.

Libya is working to re-open more oil fields, including El-Feel, National Oil Corp chairman Mustafa Sanalla said in a statement on the website of the state-run company.

BLOOMBERG