Oil prices have increased due to expectations of tighter crude market next year following the agreement by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to freeze output.
Brent crude futures were up 20 cents trading at $55.41 per barrel, while the US West Texas Intermediate (WTI) crude oil futures increased 31 cents at $52.21 a barrel, Reuters reported.
OPEC and other major oil producers have agreed to reduce almost 1.8 million barrels per day (bpd) in output beginning in January to cut global overproduction.
The news agency quoted Morgan Stanley saying: "Saudi Arabia has stated its willingness to cut production below ten million bpd if needed (down from around 10.5 million bpd currently), which should limit risk to the deal."
The US dollar has lost 0.9% against a number of other currencies since hitting 2002 highs last week, with these swings expected to affect oil demand.
Baker Hughes said that drilling for new oil in the US has increased for seven straight weeks as shale producers added 12 oil rigs in the week ending 16 December, bringing the total to 510.
Because of this, oil production in the US is increasing, representing a rise from below 8.5 million bpd in July to almost 8.8 million bpd by the middle of this month.
