Oil prices steadied on Tuesday as a rebound in Libyan crude production balanced expectations of a draw in US crude oil and product inventories. Benchmark Brent crude oil was up 25 cents at $53.37 a barrel. US light crude oil was 25 cents higher at $50.49 a barrel, Reuters reported.
Both benchmarks recovered from four-month lows last week on expectations that the Organization of Petroleum Exporting Countries would manage to tighten supply by cutting production under a deal agreed at the end of last year.
But global inventories remain stubbornly high and investors are betting that it will take many months for oil prices to respond convincingly to lower OPEC output.
"Libya's gain means oil market pain," said Tamas Varga, senior analyst at London brokerage PVM Oil Associates. "Along with figures showing US drillers added rigs for the 11th week in a row, the pullback in oil prices was spearheaded by a rebound in Libyan oil production."
Libya's crude output increased after state-owned National Oil Corp lifted a force majeure on loadings of Sharara oil from the Zawiya terminal in the west of the country, sources familiar with the matter told Reuters.
But demand is picking up ahead of summer in key markets, including the United States, where analysts forecast industry data this week will show a fall in oil inventories. UBS analyst Giovanni Staunovo said OPEC was taking longer than expected to tighten the oil market but recent data suggested the process was under way in earnest.
"We believe the implemented production cuts will trigger a material drawdown in OECD oil inventories and thus higher crude oil prices," Staunovo said. "We expect Brent oil prices to rise above $60 a barrel in three months."