TOKYO:Â Oil prices held steady on Monday as investors gauged whether an increase in the US drilling rigs and record stockpiles would undermine efforts by producers to cut output and bring the market into balance.
Brent futures LCOc1 were down 5 cents at $55.75 a barrel at 2:45 AM GMT, while the US West Texas Intermediate crude CLc1 was unchanged at $53.40. Both contracts earlier rose slightly in quiet trading.
“Sustained gains above $55 a barrel, and [hope for a] 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 USÂ shale production,” he added.
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 $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 percent, 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 February 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.