SINGAPORE (Reuters) - Oil prices dipped on Tuesday as rising U.S. drilling activity undermined efforts by OPEC and other producers to cut output in a move to prop up the market.
Brent crude futures, the international benchmark for oil prices, were trading at $55.13 per barrel at 0752 GMT, down 10 cents from their last close. Since their January peak, Brent has lost some 5.6 percent in value.
U.S. West Texas Intermediate (WTI) futures were at $52.45 a barrel, down 28 cents from their previous settlement, and WTI is down around 2.8 percent since its January peak.
The falls reflect a sentiment that efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut output by almost 1.8 barrel per day (bpd) in order to end over-production were not big enough to offset rising U.S. drilling.
U.S. investment bank Jefferies said on Tuesday that while "OPEC adherence to production targets has been strong... (U.S. drilling) activity levels are already picking up."
As a result, Jefferies said it was "not inclined to change our Brent price forecast - $57.75 per barrel in 2017, $71.75 per barrel in 2018".
Following months of increased drilling, U.S. oil production has risen by 6.3 percent since July last year to almost 9 million bpd, according to data from the U.S. Energy Information Administration.
Goldman Sachs estimates that year-on-year U.S. oil "production will rise by 290,000 bpd in 2017" if a backlog on rigs that are still to become operational is accounted for.
With the differing outlook between global oil markets and that in the United States, traders said a renewed focus on the spread between Brent and WTI futures has emerged.
The Brent premium over WTI for March delivery is currently around $2.7 per barrel, reflecting a tighter global market as OPEC's cuts bite and a more over-supplied U.S. as drilling continues to rise.
Yet by November this year, this Brent premium is down to just over $1 a barrel.
"You've already seen U.S. crude coming into Asia and Europe, as traders take advantage of arbitrage between the U.S. and the rest of the world," one crude trader in Singapore said. "But at some stage, that exported U.S. crude will get priced into the global market and out of the American one, bringing down the spread between Brent and WTI."
(Reporting by Henning Gloystein; Editing by Michael Perry and Kenneth Maxwell)