Oil hovers in tight trading range amid global supply tug of war

LONDON (Bloomberg) -- Oil held above $53/bbl, after spending last week in the smallest trading range in 13 years as investors weighed rising U.S. drilling activity against OPEC production cuts.

Futures rose 0.5% in New York after fluctuating in the narrowest range since January 2004. U.S. drillers boosted the rig count to the highest since October 2015, Baker Hughes Inc. said Friday. Meanwhile, hedge funds raised net-long positions on West Texas Intermediate and Brent to a record.

Oil has traded above $50/bbl since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply on Jan. 1 to ease a global glut. While Goldman Sachs Group Inc. predicts the market will shift into deficit in the first half of this year, U.S. crude stockpiles have increased the past six weeks to the highest level in more than three decades.

“Prices continue to be pulled between the contradictory influences of reports of falling OPEC production and rising U.S. crude inventories,” said David Martin, an analyst at JPMorgan Chase & Co. in London.

WTI for March delivery, which expires Tuesday, was up 28 cents at $53.68/bbl on the New York Mercantile Exchange at 10:05 a.m. local time on Monday. The day’s transactions will be booked on Tuesday for settlement purposes because of the U.S. Presidents’ Day holiday. Total volume traded was about 65% below the 100-day average. The more-active April contract rose 25 cents to $54.03.

Brent for April settlement gained 37 cents to $56.18/bbl on the London-based ICE Futures Europe exchange. Prices rose 16 cents to $55.81 on Friday. The global benchmark traded at a premium of $2.15 to April WTI.

Rigs targeting crude in the U.S. increased by six to 597, according to data from Baker Hughes. Drillers have added 72 rigs this year. American oil production is near the highest level since April, according to government data.