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The number of active U.S. oil rigs rose to the highest since
November 2015 last week, according to Baker Hughes data, showing
drillers are taking advantage of oil prices above $50 a barrel.
Global benchmark Brent crude oil prices were down 5 cents at
$55.47 a barrel at 1226 GMT, while U.S. crude futures traded up
9 cents at $53.26.
"Brent's performance is flat at the moment but we have three
factors that have been weighing on prices: the stronger U.S.
dollar, the steady increase in U.S. rig counts and the (latest
OPEC compliance data)," said Frank Klumpp, oil analyst at
Stuttgart-based Landesbank Baden-Wuerttemberg.
The Organization of the Petroleum Exporting Countries and other
producers including Russia agreed to cut output by almost 1.8
million barrels per day (bpd) in the first half of 2017 to
relieve a two-year supply overhang.
First indications of compliance to that deal show that members
have cut production by 900,000 barrels per day (bpd) in January,
according to Petro-Logistics, a company that tracks OPEC supply.
Tamas Varga, analyst at PVM Oil Associates in London, said the
news was "not very encouraging" because it implied that only 75
percent of the OPEC production cut target was being met.
Oil prices have remained above $50 a barrel since producers
agreed the deal in December, incentivizing drillers in low-cost
U.S. shale producing regions to ramp up activity.
"In our view the strong rise in U.S. shale oil rigs is a good
thing because it will be needed over the next three years as
non-OPEC, non-U.S. crude production continues to be hurt by the
deep capex cuts both past and present in that segment," said
Bjarne Schieldrop, chief commodities analyst at SEB Markets in
Oslo.
He estimates the U.S. rig count will continue rising at a rate
of seven rigs per week over the first half of the year.
Iran's oil minister Bijan Zanganeh said on Monday he expected
oil prices to remain at around $55 a barrel this yes, according
to Mehr news agency.
(Additional reporting by Aaron Sheldrick and Osamu Tsukimori in
Tokyo; Editing by David Goodman and Mark Potter)
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