By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices fell on Friday despite OPEC pledges to boost compliance with output curbs, on concerns over rising U.S. supplies and as traders begin to pull out crude barrels from pricey storage as physical markets show signs of tightening.
Book squaring ahead of the weekend and ahead of upcoming Feb. 28 expirations in Brent futures for April delivery, heating oil for March delivery (HOc1), and March RBOB gasoline (RBc1), also pressured prices, analysts and traders said.
Brent crude oil (LCOc1) was down 53 cents, or 0.9 percent, at $56.05 a barrel by 12:03 p.m. (1703 GMT), while U.S. West Texas Intermediate (CLc1) fell 45 cents to $54.00 a barrel.
"The oil market remains focused on the global rebalancing act, with attention centred on OPEC compliance and U.S. production growth," said Michael Tran, director of energy strategy at RBC Capital Markets in New York.
"The push-pull situation between stock draws relative to price-elastic U.S. shale remains paramount to the rebalance."
Prices have tumbled over the last two sessions after government data showed U.S. crude inventories rose for a seventh straight time last week.[EIA/S]
But prices have been supported and trading in a tight $4-5 range since November when the Organization of the Petroleum Exporting Countries (OPEC) and other producers agreed to cut production.
OPEC has so far surprised the market by showing record compliance with the deal and could do so further in coming months as the biggest laggards - the United Arab Emirates and Iraq - pledge to catch up quickly with their targets.
OPEC's average compliance is put by the International Energy Agency at a record 90 percent in January, and based on a Reuters average of production surveys, it stands at 88 percent.
However, exports from the United States, which is not part of the deal, hit a record high of 1.2 million barrels per day (bpd) last week and production rose to above 9 million bpd, the highest since April, the U.S. Energy Administration Agency said.
The U.S. oil drilling rig count has risen for five straight weeks so far and data from energy services company Baker Hughes on Friday is likely to reveal another uptick, traders said. [RIG/U]
Meanwhile, traders are turning the spigots to drain the priciest U.S. storage tanks and selling oil held in tankers anchored off Malaysia, Singapore and Indonesia as the rising price of oil for near-term delivery erodes the profits to be had by holding onto oil for later sale.
Analysts at LBBW said that the continued growth in U.S. production and oil prices that look to have reached a technical ceiling have led them to cut their year-end Brent price forecast by $5 to $55 a barrel.
"Most market participants realise that the good news from OPEC seems to be priced in; therefore, and because of the shale comeback (in the U.S.), we reduced our forecast," said LBBW oil analyst Frank Klumpp.