Global benchmark Brent crude futures were down 26 cents at $55.10 a barrel at 0803 GMT.
Hedge funds boosted bets on higher West Texas Intermediate crude prices a second week as futures topped $53 a barrel for the first time in a month, US Commodity Futures Trading Commission data show.
"Broadly speaking, any sustained rally for global oil prices continues to be challenged by a steady rise in US oil production", said Robbie Fraser, commodity analyst at Schneider Electric, in a note Monday.
Traders may be standing still in early trading to wait for official US data on supply and data before pushing the markets in either direction.
At a time when OPEC and other producing nations have been trying to cut output, government drilling data showed USA shale production next month was set to rise to 5.19 million barrels per day (bpd).
Oil edged lower after a report showed USA gasoline supplies increased for the first time in nine weeks even as crude stockpiles dropped.
Crude inventories fell 1.03 million barrels to 532.3 million last week, the agency reported Wednesday. Saudi Arabia, the world's largest crude shipper, trimmed exports to a 21-month low in February as local refineries took advantage of more abundant supplies and processed a record amount of crude.
The surprise gasoline build, along with an increase in USA production and imports from OPEC nations, pressured prices.
"It seems that the optimism in the oil market we have seen since the last few days of March is running out of steam", wrote Tamas Varga, PVM Oil Associates analyst, noting the "ever-increasing rise" in USA shale output.
Angola, which has been working hard to remain Africa's top producer, climbed to the top again for being able to maintain a daily production of 1.652 million barrels since January, even though it is a drop from last quarter of 2016 levels of 1.736mbpd. The bullish comments from the IEA came a day after the Organization of the Petroleum Exporting Countries' (OPEC) new monthly report on Wednesday revealed its members cut oil output in March more than anticipated. It stated that the global oil market could be very close to balancing supply and demand.
The country plans to double refining capacity to as much as 10 million barrels a day within 10 years, Saudi Energy Minister Khalid Al-Falih has said.
The oil markets are caught in a puzzle. Crude production rose to the highest since August 2015.
More barrels could be on their way to market from USA shale fields as financial companies are investing billions in production, a Reuters analysis showed.
Gasoline futures fell 1.52 cents, or 0.89%, to $1.6958 a gallon.
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