Oil prices have risen after traders upped their investment in crude futures over rising concerns that US may impose new sanctions on Iran that could decrease global crude supplies.
However, the increase was restricted due to indications of US production increase and the signs of falling crude demand in China.
International Brent crude futures gained 15 cents to touch $56.96 per barrel while US West Texas Intermediate (WTI) futures increased by 18 cents to reach $54.01 a barrel, reported Reuters.
Since January, US dollar weakened by almost 4% against other prominent currencies. This weakened dollar prompted investors to pour cash into crude futures.
The decision to decrease oil production by 1.8 million barrels a day by OPEC countries and Russia are also helping to support oil prices.
Last year, OPEC and other major oil exporting nations decided to reduce output to push up crude prices.
In spite of these favourable conditions, the swelling of oil prices was largely restricted due to increase in US drilling activity.
In the week that ended on 3 February, the count of active US oil rigs has increased by 17, bringing the total to 583, a report by Baker Hughes stated.
BMI research estimates that 6% of Chinese refining capacity may shut down by the first half of this year, which could negatively impact the prices.
Image: An offshore oil rig. Photo: courtesy of Vee TEC / Freeimages.com.