Investing.com - Oil prices were little changed during European morning hours on Wednesday, staying near the prior session's seven-week highs amid optimism that OPEC and its allies have been following through on their commitment to cut production.
Brent oil for April delivery on the ICE Futures Exchange in London shed 21 cents, or about 0.4%, to $56.45 a barrel by 4:15AM ET (09:15GMT), after reaching $57.31 a day earlier, just shy of its highest level of the year.
Elsewhere, crude oil for April delivery on the New York Mercantile Exchange dipped 17 cents, or 0.3%, to $54.16 a barrel. The U.S. benchmark rose to $55.03 on Tuesday, a level not seen since January 3.
Oil prices rallied after OPEC Secretary-general Mohammad Barkindo said compliance rate among cartel members who agreed to participate in the production cut deal is expected to increase above the current 90%.
Oil inventories would decline further this year, he added.
Hedge funds extended their bullish bets on oil to an all-time high last week as OPEC and non-OPEC countries made a strong start to lowering their oil output under the first such pact in more than a decade.
January 1 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 to 32.5 million by the end of June.
The deal, if carried out as planned, should reduce global supply by about 2%.
OPEC could extend its oil supply-reduction pact with non-members or even apply deeper cuts from July if global crude inventories fail to drop to a targeted level, OPEC sources said last week.
Futures have been trading in a narrow $5 range around the lower-to-mid-$50s over the past two months as sentiment in oil markets has been torn between hopes that oversupply may be curbed by output cuts announced by major global producers and expectations of a rebound in U.S. shale production.
Data from oilfield services provider Baker Hughes on Friday revealed that the number of active U.S. rigs drilling for oil rose by six last week, the fifth weekly increase in a row.
That brought the total count to 597, the most since November 2015, raising concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.
Market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Wednesday and Thursday to gauge the strength of demand in the world’s largest oil consumer.
The reports come out one day later than usual due to Monday's President's Day holiday.
Last week's numbers showed U.S. output helped boost crude and gasoline inventories to record highs, feeding concerns about a global glut.
Elsewhere on Nymex, gasoline futures for March was steady at $1.493 a gallon, while March heating oil shed 0.9 cents ,or 0.6%, to $1.632 a gallon.
Natural gas futures for April delivery lost 3.6 cents, or 1.4%, to $2.655 per million British thermal units, adding to Tuesday's almost 9% plunge, as forecasts continued to call for mostly warmer-than-normal weather in key regions across the U.S. for the rest of the winter.