Oil edged further above $55 a barrel on Wednesday supported by signs that Russia and OPEC producers are delivering on promised supply reductions, although a report showing a large rise in U.S. crude inventories limited gains.
Russia has cut production in January by around 100,000 barrels per day (bpd), according to data provided to Reuters on Wednesday. A day earlier, a Reuters survey found high compliance by OPEC with agreed cuts.
Brent crude LCOc1 was up 25 cents at $55.83 a barrel at 0954 GMT, having traded in a narrow 53-cent range so far in the session. U.S. crude CLc1 rose 26 cents to $53.07.
The producer efforts were countered by signs of a persistent supply glut in the United States. U.S. crude inventories rose by 5.8 million barrels, industry group the American Petroleum Institute said on Tuesday, more than analysts forecast.
“The oil complex remains firmly stuck in its narrow range after the API reported an unrelenting increase in bulging U.S. petroleum stockpiles,” Stephen Brennock of oil brokers PVM said.
“Any hopes of a sustained recovery in price will depend on increasing efforts by OPEC to curb output though the prospect of an upside breakout will be undermined by the budding revival in U.S. crude production.”
Following on from Tuesday’s API report, the U.S. government’s official inventory figures are due later on Wednesday. Analysts expect crude stocks to rise by 3.3 million barrels.
The cuts by Russia and the Organization of the Petroleum Exporting Countries follow last year’s agreement to lower supplies by a combined 1.8 million bpd, to prop up prices which are still half their level of mid-2014.
A Russian cut of 100,000 bpd would be a third of Moscow’s pledge to reduce its output by 300,000 bpd. However, Russia has said that its planned output reduction would be gradual.
OPEC has implemented most of its reduction. A Reuters survey on Tuesday found that OPEC members in January have delivered on about 82 percent of their deal to lower supply by 1.16 million bpd.