Oil prices lifted by signs of a tightening US market
But traders said high production by Opec was capping prices
Oil prices rose on Thursday, lifted by signs of a tightening US market, although high crude supplies from producer club Opec weighed on market sentiment.
Benchmark Brent crude was up 25 cents at US$52.61 a barrel by 13.53 GMT. US light crude was 15 cents higher at $49.74.
Strong demand in the United States has been supporting prices. The US Energy Information Administration reported record gasoline demand of 9.84 million barrels per day (bpd) for last week and a fall in commercial crude inventories of 1.5 million barrels to 481.9 million barrels.
That's below levels seen this time last year, an indication of a tightening US market.
But traders said high production by Opec was capping prices.
Opec and other producers including Russia have promised to restrict output by 1.8 million bpd until the end of March 2018 to help support prices and draw down inventories.
Yet Opec output hit a 2017 high of 33 million bpd in July, up 90,000 bpd from the previous month, a Reuters survey showed this week, led by a further recovery in supply from Libya, one of the countries exempt from the deal.
Ample supply is likely to keep a lid on prices, many analysts say.
"Our view of the oil market is that a major rally is unlikely in 2017," National Australia Bank analysts said. "Absent further production cuts or a sustained uptick in demand, prices are likely to remain in the low to mid $50s for the remainder of the year."
There are signs that the oil industry has adapted to an era of low prices and can produce and operate at levels that would previously have been uneconomic.
"Of the major projects sanctioned by the big five oil companies over H1 2017, there has been a clear breakeven target price of $40 per barrel or lower at offshore oil projects," BMI Research said.
Teh US investment bank Goldman Sachs said this week the oil industry had successfully adapted to oil prices around $50 per barrel.
Updated: August 3, 2017 06:25 PM