Oil prices were little changed on Tuesday, giving up gains after Saudi Arabia's oil minister gave mixed messages on future OPEC production cuts, while the market also braced for data that was expected to show a ninth straight weekly increase in U.S. crude inventories.
At the CERAWeek energy conference in Houston, Saudi Oil Minister Khalid Al-Falih said last year's agreement by OPEC and non OPEC countries to curb supplies and boost prices has improved oil market supply and demand fundamentals.
But Khalid said that happened only because Saudi Arabia cut beyond what it pledged, bringing the kingdom's output below 10 million barrels per day (bpd). He also said the Organization for the Petroleum Exporting Countries (OPEC) would not let rival producers take advantage of the cuts to underwrite their own production investments.
The group is expected to meet again in May, when it could consider extending the production cuts.
Brent crude was down 13 cents at $55.88 a barrel as of 2:33 p.m. ET (1933 GMT). U.S. West Texas Intermediate crude settled down 6 cents to $53.14. Both benchmarks have traded in negative and positive territory since the start of Asia trading.
Oil prices have been stuck in a $3 band since February, failing to take off after OPEC implemented, to a surprisingly high degree, the first production cut in eight years. Prices came under pressure as U.S. shale oil drilling after WTI rose firmly above $50 a barrel in December after OPEC sealed the deal with Russia and other non-OPEC producers.
"This remains a difficult trading environment given the sideways trends in the crude benchmarks that are now into their fourth month," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
Fund managers doubled their net long positions in Brent, WTI and options to 951 million barrels between the start of November and Feb. 21, betting OPEC's output cuts would lift prices.
But that bullish sentiment has wavered with Russia's lackluster participation in the cuts, rising U.S. shale output and signs OPEC countries began increasing crude exports in February.
"Market-wise, we have seen open interest on Brent fall to a six-week low as non-performing or even loss-making longs have begun to reduce exposure," said Ole Hansen, Saxo Bank's head of commodity strategy.
Russia promised to implement its 300,000 bpd share of production cuts by the end of April. But brokerage Marex Spectron predicted Russian production and exports would rise gradually, which would lead to "a quick deterioration of the short-term supply conditions."
Market watchers expect weekly data will show U.S. oil stocks rose to a record, a Reuters poll showed. Industry group the American Petroleum Institute reports its inventory data on Tuesday and the U.S. Energy Information Administration reports on Wednesday.