Investing.com - Oil prices were higher during North American morning hours on Thursday, hitting the strongest level in about a month as traders cheered signs that global supply was beginning to tighten in wake of a planned agreement by major crude producers to cut output.
Crude oil for March delivery on the New York Mercantile Exchange rose to a daily peak of $54.34 a barrel, the most since January 3.
It was last at $54.10 by 9:50AM ET (14:50GMT), up 21 cents, or about 0.4%, after jumping $1.07, or around 2%, a day earlier.
Elsewhere, Brent oil for April delivery on the ICE Futures Exchange in London added 29 cents, or 0.5%, to $57.09 a barrel. Futures touched $57.45 earlier, a level not seen since January 6.
On Tuesday, London-traded Brent rallied $1.22, or 2.2%, after data showed that Russian oil output shrank by 100,000 barrel per day in January, adding to signs that major oil producers are sticking to their pledge to cut back output.
January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million for the next six months.
The deal, if carried out as planned, should reduce global supply by about 2%.
Gains were limited amid ongoing concerns over rising U.S. oil inventories. The U.S. Energy Information Administration said on Wednesday that crude supplies rose by 6.5 million barrels last week to 494.8 million barrels.
Futures have been trading in a narrow range over the past month as sentiment in oil markets has been torn between expectations of a rebound in U.S. shale production and hopes that oversupply may be curbed by output cuts announced by major global producers.
U.S. drilling activity has risen by more than 6% since mid-2016, taking it back to levels seen in late 2014, when strong U.S. crude output contributed to a collapse in oil prices .
The revival in U.S. drilling has raised concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.
Elsewhere on Nymex, gasoline futures for March dipped 0.6 cents, or 0.4%, to $1.571 a gallon, while March heating oil tacked on 0.8 cents, or 0.5%, to $1.682 a gallon.
Natural gas futures for March delivery slumped 3.8 cents, or 1.2%, to $3.130 per million British thermal units, as market players awaited weekly storage data to gauge supply and demand levels.
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