Oilâ€™s advance to near $54 a barrel amid increased tensions between Iran and the US eased after American drillers expanded the rig count to the highest level since October 2015.
Futures rose 0.4 percent in New York after last week capping a third weekly gain. Prices climbed as much as 1.3 percent on Friday after Donald Trumpâ€™s administration imposed new sanctions on Iran and warned the Islamic Republic that itâ€™s â€œplaying with fire.â€ The measures arenâ€™t seen threatening a broader nuclear deal, while the Middle East producer is seeking to raise output. US drillers boosted the rig count by 17 to 583, according to Baker Hughes Inc.
Oil has fluctuated above $50 a barrel since a deal to trim output between the Organization of Petroleum Exporting Countries and 11 other producing nations went into effect on January 1.
While Middle East suppliers implement targeted cuts and Russia says reductions are ahead of schedule, US production has edged higher as drillers increase the nationâ€™s rig count. OPEC is scheduled to release its monthly report Feb. 13, which will include January figures.
â€œThe market is waiting for the first look at official OPEC numbers and keeping a close eye on the response from the US,â€ said David Lennox, a resources analyst at Fat Prophets in Sydney. â€œThe steady, higher price is bringing back US production. Not at a rush, but enough to keep oil from rallying.â€
West Texas Intermediate for March delivery was at $54.02 a barrel on the New York Mercantile Exchange, up 19 cents, at 7:55 a.m. in London. Total volume traded was about 43 percent below the 100-day average. The contract gained 29 cents, or 0.5 percent, to $53.83 on Friday.
Brent for April settlement rose 16 cents, or 0.3 percent, to $56.97 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 2.3 percent last week. The global benchmark crude traded a premium of $2.33 to April WTI.
Iran carried out further missile tests during an annual military exercise on Saturday, a day after President Trump imposed fresh sanctions on a raft of individuals and companies in response to the country test-firing a ballistic rocket. While the missile tests didnâ€™t contravene the nuclear accord signed in 2015, they are seen by some nations as going against a UN Security Council resolution that enshrines the agreement.
Iranâ€™s oil production capacity will reach 4 million barrels a day in March, Iranian Students News Agency reported on Saturday, citing Ali Kardor, the managing director of state-run National Iranian Oil Co. As investors are kept on tenterhooks over US policies and whether OPEC and other nations will curb output as pledged, Brent crude may vacillate between $52 and $62 a barrel, according to Kho Hui Meng, the head of the Asian arm of Vitol Group.
Iraqâ€™s exports decreased by 187,000 barrels a day to 3.323 million barrels a day in January from the previous month, according to a person familiar with the matter, who asked not to be identified because the data isnâ€™t public.