NEW YORK: Oil prices were about 1 percent lower on Monday as investors continued to await strong indications that an OPEC-led effort to drain a glut was proving effective but output increases in some top producers eased, keeping losses in check.
Libya's national oil production stood at 1.03 million barrels per day (bpd), little changed from its level since the end of last month, an oil industry official said.
US drillers added two oil rigs in the week to July 14, bringing the total to 765, Baker Hughes said on Friday. Rig additions over the past four weeks averaged five, the slowest pace of growth since November.
Still, US shale oil production was forecast to rise for the eighth consecutive month, climbing 112,000 barrels per day (bpd) to 5.585 million bpd in August.
Key technical indicators are bullish, however, with prices rising above the short-term 50-day moving averages, traders said.
Brent crude fell 49 cents, or 1 percent, to settle at $48.42 a barrel. US crude ended the session 52 cents, or 1.1 percent lower at $46.02. Prices had earlier touched their highest since July 5.
"The idea of higher production levels, particularly in the US, Libya and Nigeria ... I think that seems to have been priced in for the moment," said Gene McGillian, manager of market research at Tradition Energy.
"I am skeptical. I think the market has bounced but it's having trouble finding traction to move higher probably because some the drop off in inventories are likely due to gasoline demand picking up."
A sharp drop in US crude inventories in the week to July 7 supported prices last week. But crude stocks in industrialized nations remained high, putting a brake on the oil price rally.
"The market is not doing too much today - it feels like wait and see," said Olivier Jakob of oil analyst Petromatrix. "There is some rebalancing in products, but overall the layers of stocks are still very large."
US gasoline margins rose to the highest since April 24 amid signs of improved demand and inventory declines, traders said.
Oil prices are less than half their mid-2014 level because of a persistent glut, even after the Organization of the Petroleum Exporting Countries with Russia and other non-OPEC producers cut supplies since January.
While OPEC-led cuts have offered prices some support, rising supplies from Nigeria along with Libya, two OPEC states exempt from the pact, and increasing US production have weighed on the market.
Kuwait said on Friday the market was on a recovery track due to rising demand and said it was premature to cap Nigerian and Libyan output. An OPEC and non-OPEC committee meets in Russia on July 24 to discuss the impact of the deal.
In a sign of strong demand, data on Monday showed refineries in China increased crude throughput in June to the second highest on record. OPEC is hoping higher demand in the second half will drain excess inventories.
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