By Christopher Johnson
LONDON (Reuters) - Oil prices steadied on Thursday as record crude and gasoline inventories in the United States dragged on prices, though OPEC supply cuts helped to support the market.
Brent crude was up 10 cents at $55.85 a barrel by 1005 GMT. U.S. light crude gained 10 cents to $53.21.
The Organization of the Petroleum Exporting Countries (OPEC) and other exporters have agreed to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017, with industry data showing that most producers are sticking to the deal.
Despite this, inventories remain bloated and supplies high, especially in the United States.
U.S. crude and gasoline inventories soared to record highs last week as refineries cut output and gasoline demand softened, the Energy Information Administration said on Wednesday. [EIA/S]
Crude inventories rose 9.5 million barrels in the week to Feb. 10, nearly three times more than analyst expectations, boosting commercial stocks to a record 518 million barrels.
Gasoline stocks rose by 2.8 million barrels, compared with a forecast of a 752,000 barrel drop in a Reuters poll of analysts. That pushed gasoline inventories to a record at 259 million barrels.
The bloated stocks come as U.S. crude oil production has risen 6.5 percent since mid-2016 to 8.98 million bpd.
Analysts say oil market is balanced between these opposing factors: OPEC cuts and rising U.S. inventories and production.
Both Brent and WTI crude futures have traded within a $5 per barrel price range since the start of the year.
"Prices have not seen this kind of stability for several years," said David Wech, managing director of Vienna-based consultancy JBC Energy. "However, if crude prices are to break out of their recent range in the next few weeks, the risk is to the downside."
Gavin Wendt, founding director and senior resource analyst at commodity research firm MineLife, agreed: "There's no doubt that the world oil market is very much in wait-and-see mode, which is why the price has remained in the mid-$50s per barrel range since mid-December.
"The biggest factor is what might happen with U.S. shale production," he added, indicating that rising shale output had the potential to damage oil price stability.
Wendt said oil is likely to trade between $45 and $55 a barrel this year.