Investing.com - Oil prices were higher in European trade on Tuesday, with West Texas Intermediate futures climbing above the $34-level amid indications U.S. shale oil drillers are cutting back on production.
Crude oil for April delivery on the New York Mercantile Exchange rose to an intraday peak of $34.32 a barrel before falling back to $34.22 by 07:55GMT, or 2:55AM ET, up 47 cents, or 1.39%.
A day earlier, New York-traded oil futures soared 97 cents, or 2.96%, on signs that U.S. drilling activity is hitting new lows.
According to industry research group Baker Hughes, the number of rigs drilling for oil in the U.S. decreased by 13 last week to 400, the tenth straight weekly decline.
A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.
However, analysts warned that market conditions remained weak due to an ongoing glut. U.S. crude stockpiles increased by 3.5 million barrels last week to an all-time high of 507.6 million barrels, according to the U.S. Energy Information Administration, underlining concerns over a domestic supply glut.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, rose by 333,000 barrels last week, raising fears that the nation's largest storage facility is nearing full capacity.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 3.5 million barrels in the week ended February 26.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery tacked on 37 cents, or 1.01%, to trade at $36.96 a barrel after hitting a daily peak of $37.06, the most since January 5.
On Monday, Brent futures rallied $1.13, or 3.19%, after Saudi Arabia promised to cooperate with other major producers in renewed efforts to limit extreme volatility on global oil markets.
Separately, a survey from Reuters showed that OPEC supply declined slightly this month, providing a glimmer of hope that oil could be on the verge of halting a 20-month downturn where prices have tumbled more than 70% from June, 2014 highs of $115 a barrel.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at $2.74 a barrel, compared to a gap of $2.82 by close of trade on Monday.