Oil dips on record U.S. inventories, but OPEC cuts lend some support

By Henning Gloystein

SINGAPORE (Reuters) - Oil dipped on Thursday as rising fuel inventories and crude production in the United States dragged on prices although ongoing supply cuts led by producer group OPEC prevented the market from slumping further.

Brent crude futures were trading at $55.69 per barrel at 0751 GMT, down 6 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures dropped 10 cents to $53.01 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia have agreed to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017, and estimates suggest compliance by OPEC is around 90 percent.

The production cuts are aimed at reining in a global fuel supply overhang that has dogged markets for over two years.

Despite this, inventories remain bloated and supplies high, especially in the United States.

U.S. crude oil and gasoline inventories soared to record highs last week as refineries cut output and gasoline demand softened, the Energy Information Administration said on Wednesday.

Crude inventories rose 9.5 million barrels in the week ended Feb. 10, nearly three times more than analyst expectations, boosting commercial stocks to an all-time record at 518 million barrels.

Gasoline stocks rose 2.8 million barrels, compared with analyst expectations in a Reuters poll for a 752,000-barrel drop. That pushed inventories of the fuel to a record at 259 million barrels.

The bloated stocks come as U.S. crude oil production has risen 6.5 percent since mid-2016 to 8.98 million bpd.

Because of the conflicting price drivers of OPEC's cuts and rising U.S. inventories and production, analysts said that prices were largely moving sideways.

Both Brent and WTI crude futures have traded within a $5 per barrel price range since the start of the year.

"There's no doubt that the world oil market is very much in wait-and-see mode, which is why the price has remained in the mid-$50s per barrel range since mid-December," said Gavin Wendt, founding director and senior resource analyst at commodity research firm MineLife.

"The biggest factor is what might happen with U.S. shale production," he said, adding that rising shale output had the potential to damage oil price stability.

Wendt said oil would likely trade between $45 and $55 per barrel in 2017.

(Reporting by Henning Gloystein; Editing by Joseph Radford and Biju Dwarakanath)