Investing.com - Crude oil prices remained near three-month highs Wednesday as fears that record output from U.S. shale producers next month would add to the glut in supply were offset by Saudi energy minister Khalid al-Falih's positive remarks on further production cuts from OPEC members.
But analysts warned the sun could soon set on the rally in oil prices.
On the New York Mercantile Exchange, WTI crude futures for April delivery rose 96 cents to $57.41 a barrel, while on London's Intercontinental Exchange, Brent added 82 cents to trade at $67.27 a barrel.
Al-Falih said Wednesday OPEC members had pledged to cut production in line with their current output agreement in the coming months in an effort to stabilize oil prices.
"I have been speaking to many ministers and those who have been slow in achieving their targets in January have all committed to getting quickly into position to meet their commitment through six months," Al-Falih said.
A monitoring committee for an OPEC and non-OPEC oil supply reduction deal said compliance with the agreement to cut output by 1.2 million barrels a day production cuts was at 83%, four delegates from the group told Reuters on Wednesday.
Falih's positive remarks on further production cuts helped oil prices hold onto their gains, but analyst warned the rally may soon run out of out of steam.
"(T)here are already signs that growth in demand will be weaker this year, which will remove much of the pressure on supply and take the heat out of prices," according to Caroline Bain, chief commodities economist at Capital Economics.
Oil prices are up more than 20% since the turn of the year, underpinned by production cuts from OPEC members and supply outages in Venezuela and Iran amid U.S. sanctions. But the ongoing ramp-up in U.S. output threatens to keep a lid on the rally.
"But our forecast of more subdued growth in demand in the coming months, coupled with persistently strong U.S. output, suggests that prices will fall back," Bain added.
Crude oil production from seven major U.S. shale plays is estimated to rise by 84,000 barrels a day in March to 8.398 million barrels a day, the Energy Information Administration said on Tuesday.
The positive day for crude prices comes ahead of U.S. crude inventory data from the American Petroleum Institute on Wednesday at 4:30 PM ET. A report from EIA on Thursday is expected to show a build in U.S. crude inventories for the week ended Feb. 15.