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Oil markets held largely steady on Tuesday, even as OPEC producers Saudi Arabia and Iraq pointed to a reduction in supplies in line with efforts to tighten the market and prop up prices.
Prices were capped by rising US shale output and fears that another strong hurricane hitting the Caribbean could knock out refineries and disrupt shipping to and from the United States.
Brent crude futures, the international benchmark for oil prices, were at $55.50 per barrel at 0653 GMT, up 2 cents from their last close. US West Texas Intermediate (WTI) crude futures were at $50.01 per barrel, up 10 cents, or 0.2 per cent, from their last settlement.
Iraq's oil minister Jabbar al-Luaibi said on Tuesday that his country's crude oil production was currently at 4.32 million barrels per day (bpd). That compares to almost 4.5 million bpd in May and June.
His comments came after data showed Saudi crude exports fell to 6.693 million bpd in July, down from 6.889 million bpd in June.
Saudi Arabia is the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-OPEC producers like Russia, has pledged to hold back around 1.8 million bpd of supplies this year and into 2018 in order to tighten the market and prop up prices.
But with the United States not part of this agreement, analysts said the upside for prices was limited due to the rising US output.
US shale production is set to rise for a tenth month in a row in October, the US government had said late on Monday. Output across seven shale plays is forecast to rise by nearly 79,000 bpd to 6.1 million bpd, according to the US Energy Information Administration.
“Technological advancements continue to make inroads in the US shale industry, boosting well-level economics ... 80 per cent of the cost base is below $60 per barrel (and) breakevens have fallen a further 15 per cent just in the last year,” Barclays bank said in its September market outlook.
It said significant numbers of producers could also operate below $40 per barrel.
“We remain bearish on prices at current levels due to expected shale growth, Chinese economy concerns,” the bank said, adding that its average Brent and WTI price forecast was $53 and $49 per barrel, respectively, for this year and $52 and $49 per barrel for 2018.
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