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UPDATE 5-Oil climbs as firm demand absorbs ample supply

* OPEC-shale "tug of war" keeping market range-bound

* China refineries increase throughput

* But crude markets struggle with oversupply

* Rising oil production in Libya, Nigeria, United States (Updates prices in paragraph 2)

LONDON, July 18 (Reuters) - Oil prices rose on Tuesday as demand soaked up some of the surplus supplies from OPEC and the United States, but traders said the market remained in a tight range and showed few signs of big short-term moves.

Benchmark Brent crude was up 70 cents at $49.12 a barrel by 1335 GMT, while U.S. light crude oil was 65 cents higher at $46.67.

"We're stuck in a range that ... will be tough to break out of without some kind of political factor coming into play," Matt Stanley, fuel broker at Freight Investor Services, said.

In a sign of strong demand, data on Monday showed refineries in China increased crude throughput in June to the second highest on record.

But many markets are well supplied and oil for prompt delivery is trading at heavy discounts to forward futures in several parts of the world. As a result, crude oil prices are trading at only around half the levels seen three years ago.

A deal by the Organization of the Petroleum Exporting Countries with Russia and other non-OPEC producers to cut supplies by around 1.8 million barrels per day (bpd) between January this year and March 2018 has so far failed to tighten the market or push up prices.

Although many OPEC countries have restricted production, others including Nigeria and Libya have been allowed to increase output.

Ecuador, a small producer within OPEC, said it was not cutting its production by 26,000 bpd as agreed due to the country's fiscal deficit.

Oil Minister Carlos Perez said Ecuador was cutting only 60 percent of that figure, putting current output at 545,000 bpd.

"We are not meeting the quota imposed on us because of the obvious needs the country has," Perez said.

U.S. oil production is also rising steadily.

The U.S. Energy Department said in a report U.S. shale oil output was likely to rise for the eighth consecutive month in August, climbing 112,000 bpd to 5.585 million bpd.

"With little sign of the OPEC-shale tug of war drawing to an end, the scene is now set for a period of range-bound trading as market players await the next price catalyst," Stephen Brennock at brokerage PVM Oil Associates said. (Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson and Alexander Smith)