Oil prices steadied on Tuesday as lower production by OPEC and other exporters balanced growing evidence of a revival in U.S. shale production and sluggish demand.
Benchmark Brent crude was down 15 cents at $55.57 a barrel by 1045 GMT. On Monday, the Brent futures contract closed down $1.09 a barrel. U.S. crude was 15 cents lower at $52.86 after closing down 82 cents on Monday.
Price support was coming from an effort by the Organization of the Petroleum Exporting Countries and other exporters to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017.
But while OPEC and Russia have together cut at least 1.1 million bpd so far, rising U.S. production, as well as signs of slowing demand growth, threaten to undermine these efforts.
“The general perception is that OPEC is cutting production, which is supporting prices, but high stock levels, rising rig counts and growing U.S. production are capping gains,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.
Since the beginning of the year both crude contracts have traded within a $5 per barrel price range, suggesting a lack of strong price momentum in either direction.
“$55 per barrel is quite obviously the pivot point in this market ... and it has been for some time,” said Matt Stanley, a fuel broker with Freight Investor Services (FIS) in Dubai.
Chinese oil demand grew at the slowest pace in at least three years in 2016, Reuters' calculations based on official data showed, the latest indication that demand from the world's largest energy consumer has diminished.
And there are concerns that U.S. gasoline consumption is stalling.
Gasoline stockpiles rose by almost 21 million barrels in the first 27 days of 2017, compared with an average increase of less than 12 million barrels at the same time of year during the previous decade, according to official inventory data, implying either stalling demand or ongoing oversupply.