Investing.com - Crude oil prices recovered in Asia on Tuesday with investors eyeing record December exports by Iraq via its southern port at Basra, noting that there would need to be a corresponding drop in shipments via the north as part of its pledges to OPEC to trim output.
Iraq, the second biggest producer within the Organization of the Petroleum Exporting Countries (OPEC), has given full supply allocations of Basra crude to three refiners in Asia and Europe for February, according to sources.
Crude oil for February delivery on the New York Mercantile Exchange edged up 0.12% to $52.02 a barrel. Elsewhere, Brent oil for March delivery on the ICE Futures Exchange in London was last quoted up 0.07% to $54.81 a barrel.
Ahead, the American Petroleum Institute is slated to release esyimates of crude andrefined product inventories in the U.S. at the end of last week late on Tuesday. The figures will be followed by official data from the U.S. Department of Energy on Wednesday.
Overnight, oil prices kicked the week off in the U.S. with steep declines on Monday, adding to overnight losses as indications of increased drilling activity in U.S. offset signs OPEC members are adhering to planned output cuts.
According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 4 to 529, the tenth straight weekly rise and a level not seen in more than a year.
Some analysts have warned that the recent rally in prices could be self-defeating, as it encourages U.S. shale producers to drill more, adding to concerns over a global supply glut.
Meanwhile, traders continued to monitor developments surrounding the landmark deal reached by the Organization of the Petroleum Exporting Countries and several non-OPEC oil producers to reduce their output this year.
Oil tallied a weekly gain last week amid signals that major oil producers, such as Saudi Arabia and Kuwait, are sticking to their pledge to cut back output.
The New Year marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day. The deal, if carried out as planned, should reduce global supply by about 2%.
However, some traders remain skeptical that the planned cuts will be as substantial as the market currently expects. There are also some worries in the market about production increases in Libya and Nigeria, which are both allowed to ramp up production as part of the OPEC deal.