By Henning Gloystein
SINGAPORE (Reuters) - Oil held steady on Thursday, supported by ongoing supply cuts led by producer group OPEC, while rising fuel inventories and crude production in the United States dragged on prices.
Brent crude futures (LCOc1) were trading at $55.74 per barrel at 0550 GMT, down just 1 cent from their last close.
U.S. West Texas Intermediate (WTI) crude futures (CLc1) dropped 6 cents to $53.05 per barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia have agreed to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017, and estimates suggest compliance by OPEC is around 90 percent. [nL8N1FY3GK]
The production cuts are aimed at reining in a global fuel supply overhang that has dogged markets for over two years.
Yet despite action so far, inventories remain bloated and supplies high, especially in the United States.
U.S. crude oil and gasoline inventories soared to record highs last week as refineries cut output and gasoline demand softened, the Energy Information Administration said on Wednesday.
Crude inventories
Gasoline stocks
The bloated stocks come as U.S. crude oil production
Because of the conflicting price drivers of OPEC's cuts and rising U.S. inventories and production, analysts said that prices were largely moving sideways.
Both Brent and WTI crude futures have traded within a $5 per barrel price range since the start of the year.
"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," said Gavin Wendt, founding director and senior resource analyst at commodity research firm MineLife.
"The biggest factor is what might happen with U.S. shale production," he said, adding that rising shale output had the potential to damage oil price stability.
Wendt said oil would likely trade between $45 and $55 per barrel in 2017.