By Kevin Baxter and Jenny W. Hsu

Oil prices were little changed Monday as reports of increased drilling in the U.S. dampened appetite among investors following last week's 2% uptick.

The April contract for global crude benchmark Brent was down 0.14% to $56.72 while its U.S. counterpart West Texas Intermediate edged up 0.03% to $53.86 for March deliveries.

Oil-field services company Baker Hughes reported that shale oil rigs in the U.S. grew by 17 last week to total 583. This led many analysts and market observers to predict that 2017 will be the comeback year for shale oil after two years of cost-cutting and bankruptcies.

"We expect a strong revival in U.S. shale oil production and expect yet more rigs to be added to the market," said Bjarne Schieldrop, an analyst with Stockholm-based SEB bank.

He said he believed that spending on U.S. onshore oil exploration and production will rise by 30%-40% in 2017 and the rig-count could be higher than 1,000 by 2019.

Higher U.S. domestic production could undermine the effect of current production cuts from the Organization of the Petroleum Exporting Countries and other major producers, particularly if the exports from the world's largest consumer start to have an impact on key markets in Asia.

However, the market is still buoyed by the OPEC-led cuts and the positive sentiment shows no signs of ending despite Brent being down slightly.

"The steadier tone in oil we are calling for is partly attributable to the fact that OPEC seems to have pulled a rather respectable production deal so far," said financial-service company INTL FCStone, suggesting the cartel and the 11 other non-OPEC producers have reached a 75% compliance level. OPEC's January production data will be released on Monday.

Meanwhile, the current tension between the U.S. and Iran is viewed by Germany's Commerzbank as supportive of oil prices.

The testing of a ballistic missile by Tehran has led to fears that the nuclear agreement that was signed in early 2016 may be abandoned.

Nymex reformulated gasoline blendstock for March--the benchmark gasoline contract--was up 0.13% at $1.56 a gallon, while March diesel traded at $1.67, 0.29% higher.

ICE gasoil futures changed hands at $503.50 a metric ton, up 0.55% from Friday's settlement.

Write to Kevin Baxter at and Jenny W. Hsu at

(END) Dow Jones Newswires

February 06, 2017 07:16 ET (12:16 GMT)

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