Oil prices were higher during European morning hours on Tuesday, but remained in a familiar trading range as market players continued to weigh the prospect of production cuts by major crude-producing nations against a rise in U.S. drilling.
Crude oil for March delivery on the New York Mercantile Exchange tacked on 38 cents, or around 0.8%, to $53.36 a barrel by 4:10AM ET (09:10GMT), after losing 93 cents, or 1.7%, a day earlier.
Elsewhere, Brent oil for April delivery on the ICE Futures Exchange in London inched up 50 cents, or about 0.9%, to $56.09 a barrel. The global benchmark lost $1.11, or nearly 2%, on Monday.
Futures have been trading in a narrow range around the lower-to-mid-$50s over the past month as sentiment in oil markets has been torn between hopes that oversupply may be curbed by output cuts announced by major global producers and expectations of a rebound in U.S. shale production.
U.S. drilling activity has risen by almost 7% since mid-2016, taking it back to levels seen in late 2014, when strong U.S. crude output contributed to a collapse in oil prices.
The revival in U.S. drilling has raised concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.
OPEC and non-OPEC countries have made a strong start to lowering their oil output under the first such pact in more than a decade as global producers look to reduce oversupply and support prices.
Latest data showed the group’s production in January declined by 890,000 barrels a day from the previous month to 32.14 million barrels a day. The drop indicates a 90% compliance level so far by producers who had agreed to curtail their output.
January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million for the next six months.
Elsewhere on Nymex, gasoline futures for March rose 2.0 cents, or 1.3%, to $1.564 a gallon, while March heating oil added 1.5 cents ,or 1%, to $1.642 a gallon.
Natural gas futures for March delivery slumped 2.7 cents, or 0.9%, to $2.917 per million British thermal units, the lowest in 12 weeks, as forecasts continued to call for mostly warmer-than-normal weather in key regions across the U.S. for the rest of the winter.