Oil prices edged up for a second day on Friday on expectations that a weekend meeting of the world's top oil producers would demonstrate compliance to a global output cut deal, but a larger than expected rise in weekly US crude stocks capped the gains.
International benchmark Brent crude prices were up 68 cents at $54.84 a barrel at 0950 GMT.
US West Texas Intermediate (WTI) crude oil futures were trading up 63 cents at $52 a barrel.
“Prices were pushed down a bit too far and hopes will rise that the OPEC/non-OPEC meeting this weekend will show that these producers actually give some proof that they cut production," said Hans van Cleef, senior energy economist at ABN Amro.
A weekend meeting in Vienna of members of the Organization of the Petroleum Exporting Countries (OPEC) and some producers outside of the group, including Russia, will establish a compliance mechanism to verify producers are sticking to a deal to reduce output, OPEC's secretary general told Reuters.
However, higher crude oil and gasoline stocks in the United States weighed on prices on Friday.
US crude inventories rose unexpectedly last week as refineries sharply slowed production, while gasoline stocks soared amid weak demand, the Energy Information Administration had said on Thursday.
Crude inventories rose 2.3 million barrels in the week to January 13, compared with analyst expectations for an increase of 342,000 barrels.
The data showed much larger than expected builds in gasoline stocks, with inventories on the US east coast, the biggest demand region, swelling to the highest weekly levels on record for this time of year, when refiners typically begin storing barrels ahead of the summer driving season.
Bjarne Schieldrop, chief commodities analyst at SEB Markets, said Brent crude was starting to move into a trading range centered around $55 a barrel as the production cut deal had placed a floor price of $50 a barrel, while US shale oil producers were capping the upside at $60 a barrel.
“As a new consensus is starting to form, the fog around the oil market balance is starting to clear and the oil price is likely going to start to stabilise,” he said.