Oil edged up towards $64 a barrel on Tuesday, helped by a North Sea pipeline outage, OPEC-led supply cuts and expectations that U.S. crude inventories had fallen for a fifth week.
But rising output in the United States has put a lid on gains. Shale production will rise to a record in January, according to a government forecast published on Monday, as higher prices encourage companies to pump more.
Brent crude, the global benchmark, was up 20 cents to $63.61 a barrel at 1427 GMT. U.S. crude gained 23 cents to $57.39.
The shutdown of the North Sea`s Forties pipeline since last week has supported Brent in particular, as Forties is the largest of the five crude grades underpinning the benchmark. Brent reached $65.83, its highest since mid-2015, on Dec. 12.
"This should ensure buying pressures remain at the fore of the Brent structure until the turn of the year at the very least," said Stephen Brennock of oil broker PVM.
Ineos, the operator of the Forties pipeline, said on Tuesday it was moving forward with a preferred repair option and the timeframe for the fix remained two to four weeks starting from Dec. 11, the date of the shutdown.
Oil ticked up after reports that a missile was fired at the Saudi Arabian capital Riyadh from Yemen, but Saudi Arabia said it intercepted the missile and no casualties were reported.
"The market has not been doing very much and you do have headlines etcetera, but it doesn`t really change anything," said Olivier Jakob, an analyst at Petromatrix.
A deal by the Organization of the Petroleum Exporting Countries and non-member producers including Russia to cut supplies to curb a supply glut that has built up since 2014 has also boosted prices.
OPEC and its allies have extended the agreement until the end of 2018 and Russia`s Rosneft said on Monday it could be maintained beyond next year.
As a result of the cuts, oil inventories are falling globally and the latest weekly supply reports are expected to show a further reduction in U.S. crude inventories.
The first of these reports, from the American Petroleum Institute, is due at 2130 GMT on Tuesday.
Still, rising U.S. production is countering lower supply elsewhere. U.S. shale output in January is forecast to increase by 94,000 barrels per day to 6.41 million bpd, according to the EIA`s monthly drilling productivity report.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)