LONDON: Oil prices rose close to $56 a barrel on Monday as a weaker dollar offset concerns over global oversupply after Saudi Arabia said it was pumping around 10 million barrels per day, near a record high.
Schlumberger Ltd, the world's top oilfield services provider, said oil prices could increase in the second half of the year as it expected the oil and gas industry's spending internationally on exploration and production to drop by 10-15 percent in 2015.
Brent crude oil futures were trading up 55 cents at $55.87 a barrel at 1436 GMT, after hitting a low of $54.12. U.S. WTI crude was up 34 cents at $46.91.
Oil prices have seesawed in recent days, weighed down by oversupply concerns but boosted by the weakening of the dollar ahead of the expected end of years of zero-interest rate policy in the United States later this year.
On Monday, oil reversed earlier losses after the dollar renewed its slide, losing 0.9 percent against a basket of currencies.
"The dollar fell sharply again, which lends tailwind to oil prices," Commerzbank analyst Carsten Fritch said.
Saudi Arabia has stood firm on its decision to maintain production levels, saying it would consider cutting output only if producers outside OPEC also did so.
Saudi Oil Minister Ali al-Naimi said the kingdom was now pumping around 10 million barrels per day (bpd), which could indicate an increase of 350,000 bpd over its February production.
Analysts at Barclays forecast on Monday that if OPEC production held near current levels of near 30 million bpd, the market surplus would expand from 900,000 bpd to 1.3 million bpd.
China's February crude oil imports from Iran fell 3.7 percent from a year earlier to 2.04 million tonnes. China boosted overall imports late last year, taking advantage of cheap oil to build its reserves, but storage tanks could be reaching their limits, forcing a slowdown in orders.
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