Oil dipped on Tuesday on lingering concerns over global fuel oversupply due to rising US output and doubts that OPEC and other producers would adhere to commitments to cut output in an effort to balance markets and prop up prices.
Brent crude futures, the international benchmark foroil prices, were at $55.55 per barrel at 0643 GMT, down 31 cents from their last close.
US West Texas Intermediate (WTI) crude futures were down 7 cents at $52.30 per barrel.
“The Asian market is focused on the build in US production which is nearly up to 9 million barrels per day (bpd) - up from 8.5 million bpd last June and close to 2014 production levels," said Michael McCarthy, chief market strategist at Sydney's CMC Markets.
“With US. crude clearly above $50 a barrel, we are getting a supply-side response which is pushing production higher,” he said.
McCarthy said the US figures were fuelling concerns about ongoing oversupply.
“Potential oversupply shows this is not the right time to be buying oil,” he said.
Traders said markets were receiving some support from top crude exporter Saudi Arabia, which said it would adhere strictly to its commitment to cut output under the agreement between OPEC and other producers like Russia.
“Many countries are actually going the extra mile andcutting beyond what they've committed ... I am confident about the impact ... and I am very encouraged about those first two weeks,” Saudi Energy Minister Khalid al-Falih said on Monday atan industry event in Abu Dhabi.
Under the agreement, OPEC, Russia, and other non-OPEC producers have pledged to cut oil output by nearly 1.8 million barrels per day (bpd), initially for six months, to bring supplies back in line with consumption.
Yet crude futures have fallen 5 per cent since their early January peaks, as financial oil traders remain sceptical about OPEC's and Russia's willingness to fully comply with the cuts.
Refinery outages in West Asia and Asia over the past week have also hit short-term demand for crude in the region, traders said.
Analysts also said that steps to prop up oil prices through a cut in supplies could be self-defeating.
“For each $10 per barrel increase in oil prices, oil demand will decline by 10 basis points. While consensus expects demand-growth of 1.3 million bpd in 2017 (vs 1.4 million bpd in2016), we see risks to the downside as demand growth in Chinaand India starts to moderate,” AB Bernstein said.