By Amanda Cooper (Reuters)
LONDON - Oil reversed earlier losses on Wednesday as investors took heart from strict OPEC compliance with its pledge to cut output, although evidence of increasing U.S. production capped gains.
The Organization of the Petroleum Exporting Countries reduced its oil output for a second month in February, a Reuters survey found, showing the exporter group has boosted already strong compliance to around 94 percent.
Heftier cuts by Saudi Arabia and Angola helped offset weaker compliance by other members that agreed to limit their output.
May Brent crude futures <LCOc1> were last up 27 cents at $56.78 a barrel by 1030 GMT, while U.S. West Texas Intermediate (WTI) futures for April <CLc1> were up 18 cents at $54.19.
Oil prices are 23 percent higher than they were at the end of November, when OPEC announced its deal, but this strength has encouraged more U.S. production to come back online.
"There seems ... to be a consensus within OPEC that the optimal crude oil price is as near as possible to the upper line of our shale band price range ($40-60 a barrel) but not significantly above," Olivier Jakob, a strategist at consultant Petromatrix, said.
"OPEC will be happy with price stability in the upper half of our shale band (i.e. trying to keep prices in the $50-60 upper half) and above $60 a barrel, we will see more OPEC cheating as members do not want to see U.S. shale oil come back too strongly."
Investors were waiting for weekly U.S. inventory data at 1530 GMT.
U.S. crude stockpiles have risen for seven straight weeks. Forecasts for another build last week, this time of 3.1 million barrels, have fueled worries that demand growth may not be sufficient to soak up the global oil glut. <EIA/S>
The market offered little reaction to news of a rise in North Sea crude supply next month. Loading programs for the four crudes that underpin dated Brent showed a rise to 908,000 barrels per day, from March's 884,000 bpd. [O/LOAD]
A speech by U.S. President Donald Trump late on Tuesday gave little detail on plans by his administration to boost U.S. oil production.
Traders and investors had expected Trump to include specifics on energy policy in an address to the U.S. Congress.
"If Trump had announced de-regulations of some of the environment protections to make it easier to pump more oil, that might have put pressure on WTI," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
(Reporting by Naveen Thukral; Editing by Christian Schmollinger and Sherry Jacob-Phillips)