Oil little changed, supply outlook unclear

By Scott DiSavino

NEW YORK (Reuters) - Oil prices were little changed on Monday, with little news to influence a market waiting to see whether U.S. production from shale fields will grow enough to offset planned output cuts by OPEC, Russia and other producers next year.

Brent futures for February delivery were down 24 cents, or 0.4 percent, at $54.97 a barrel by 11:43 a.m. EST (1643 GMT). U.S. West Texas Intermediate crude for January rose 6 cents, or 0.1 percent, to $51.96 per barrel on its last day as the front-month.

"Implied U.S. output increases...will offset a significant portion of the planned OPEC production cuts especially since we don't anticipate sustained strong compliance," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

"While adherence to (OPEC) cutbacks could be quite high initially, we will be surprised by compliance much above 60 percent by the end of the first quarter as (U.S.) shale responds to a higher price environment," Ritterbusch said.

U.S. oil output is expected to increase as energy companies last week continued to add oil rigs, extending a seven-month drilling recovery.

"Since its trough on May 27, producers have added 194 oil rigs (+61 percent) in the U.S.," U.S. bank Goldman Sachs said.

As a result, U.S. oil production is edging up, rising from below 8.5 million barrels per day (bpd) in July to almost 8.8 million bpd by mid-December.

A week ago, oil prices climbed to a 17-month high after the Organization of the Petroleum Exporting Countries and some other producers agreed over the prior few weeks to cut almost 1.8 million bpd in oil output starting in January.

Some analysts expect oil prices to stay strong into early 2017.

"With investors now expecting a relatively high level of compliance with the production-cut agreements, prices should be well supported," ANZ bank said on Monday.

Speculators raised their holdings of Brent crude oil futures to a record high last week.

Traders noted a possible delay in Libyan exports provided some support to oil prices earlier in the session.

In Libya, a group guarding oil infrastructure said late last week it had reopened a long-blockaded pipeline leading from the oilfields of Sharara and El Feel. Over the weekend, however, a separate group prevented a production restart at El Feel.

(Additional reporting by Libby George and Dmitry Zhdannikov in London, and Henning Gloystein in Singapore; Editing by Dale Hudson, Greg Mahlich and David Gregorio)