By Karolin Schaps
LONDON (Reuters) - Oil prices edged up for a second day on Friday on expectations that a weekend meeting of the world's top oil producers would demonstrate compliance to a global output cut deal, but a larger than expected rise in weekly U.S. crude stocks capped gains.
International benchmark Brent crude prices (LCOc1) were up $1.30, or 2.4 percent, at $55.46 a barrel at 1419 GMT.
U.S. West Texas Intermediate (WTI) crude oil futures (CLc1) were trading up $1.25, also 2.4 percent, at $52.62 a barrel.
"Prices were pushed down a bit too far and hopes will rise that the OPEC/non-OPEC meeting this weekend will show that these producers actually give some proof that they cut production," said Hans van Cleef, senior energy economist at ABN Amro.
A weekend meeting in Vienna of members of the Organization of the Petroleum Exporting Countries and some producers outside of the group, including Russia, will establish a compliance mechanism to verify producers are sticking to a deal to reduce output by 1.8 million barrels per day (bpd), OPEC's secretary general told Reuters.
Saudi Arabia's energy minister said on Friday that 1.5 million bpd had already been taken out of the market, adding to signs that the oil market is rebalancing.
However, higher than expected crude oil and gasoline stocks in the United States capped gains.
U.S. crude inventories rose unexpectedly last week as refineries sharply slowed production, while gasoline stocks soared amid weak demand, the Energy Information Administration said on Thursday.
Crude inventories
The data showed much larger than expected increases in gasoline stocks, with inventories on the U.S. east coast, the biggest demand region, swelling to the highest weekly levels on record for this time of year.
Adding to bearish news was the continuing rise in oil production from Libya, which is exempt from the producers' output cut deal. Libya's National Oil Corporation (NOC) said production had now climbed to 722,000 bpd, resuming its rise after poor weather had caused a small dip.
Bjarne Schieldrop, chief commodities analyst at SEB Markets, said Brent crude was starting to move into a trading range centred around $55 a barrel as the production cut deal had placed a floor price of $50 a barrel, while U.S. shale oil producers were capping the upside at $60 a barrel.
"As a new consensus is starting to form, the fog around the oil market balance is starting to clear and the oil price is likely going to start to stabilise," he said.