US oil settles at $53.18 a barrel, up 7 cents in overall strong week for crude

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Oil prices were little changed on modest volume on Thursday, in a week where crude benchmarks recouped more of March's losses on increased hopes world supply and demand were nearing balance.

Benchmark Brent crude futures were up 1 cent at $55.87 a barrel as of 2:30 p.m. ET, after touching a one-month high on Wednesday. U.S. West Texas Intermediate crude futures settled at 7 cents at $53.18 a barrel.

The Paris-based International Energy Agency (IEA) said on Thursday that supply and demand in the global oil market were close to matching after a fall in stockpiles in developed countries in March.

What to do with oil stocks as US production rises

The market has been oversupplied for three years, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017 to rein in the glut.

OPEC meets on May 25 to consider extending the cuts beyond June. Saudi Arabia, Kuwait and most other OPEC members are leaning towards this if agreement is reached with other producers, OPEC sources told Reuters last month.

OPEC data showed members of the group had cut March output beyond the level they had promised.

At the same time, however, U.S. production has continued to increase, with overall production rising to 9.24 million barrels a day out of the United States, according to U.S. Energy Department figures.

Later on Thursday, Baker Hughes data on active U.S. rigs will be released; the number of rigs has increased for 12 consecutive weeks headed into this week's data.

John Kilduff, partner at Again Capital in New York, said he expects U.S. production to continue rising, both onshore and offshore, which will act as a headwind for the market.

"There's a lot more to come - and rapidly," he said.

Chinese oil demand will continue to grow: S&P Global Platts

The IEA said oil stocks in the Organisation for Economic Cooperation and Development industrialized countries fell by 17.2 million barrels in March, although inventories were still 300 million barrels above the five-year average.

"It can be argued confidently that the market is already very close to balance," the agency said in its monthly report.

The IEA trimmed its oil demand growth forecast for 2017 by 40,000 barrels per day and warned that its revised level of 1.3 million barrels per day "could prove optimistic."