U.S. oil prices climbed on Tuesday as the dollar weakened, but an increase in drilling activity in the United States is likely to keep a lid on prices.
U.S. West Texas Intermediate (WTI) crude futures were up 14 cents at $52.89 a barrel by 0023 GMT. Brent crude, the international benchmark for oil prices, was yet to start trading.
The dollar slumped to a seven-week low against a currency basket on Monday, weighed by concerns about the early days of U.S. President Donald Trump’s administration that have so far been marred by protests, a protectionist inauguration speech and angry comments on Twitter.
A weaker dollar makes greenback-priced commodities cheaper for importer holding other currencies.
“Another strong increase in drilling rigs operating in the U.S. took the gloss off the better-than-expected adherence by OPEC to the agreed production cuts,” ANZ said in a report.
“President Trump’s comments that the U.S. would end its dependence on imported oil also added to the unease in the market.”
U.S. drillers added the most rigs in nearly four years, data from energy services company Baker Hughes showed on Friday, extending an eight-month drilling recovery.
U.S. oil production has risen by more than 6 percent since mid-2016, though it remains 7 percent below the 2015 peak. It is back to levels seen in late 2014, when strong U.S. crude output contributed to a crash in oil prices.
The increase in U.S. production is offsetting plans to reduce output by the Organization of the Petroleum Exporting Countries (OPEC) and other producers.
Those countries have made a strong start to lowering their oil output under the first such pact in more than a decade, energy ministers said on Sunday.
Iraq’s oil minister said on Monday that most oil majors working on its territory were participating in oil output reductions agreed as part of the deal.