Oil edged up towards $64 a barrel today, helped by a North Sea pipeline outage, OPEC-led supply cuts and jitters about threats to Middle East supplies after a missile was fired by a Yemeni group at the Saudi capital.
But rising output in the US has put a lid on gains.
Shale production will rise to a record in January, according to a government forecast published this week, as higher prices encourage companies to pump more.
Brent crude, the global benchmark, was up 22 cents to $63.63 a barrel this afternoon. US crude gained 33 cents to $57.49.
The shutdown of the North Sea's Forties pipeline since last week has supported Brent in particular, as Forties is the largest of the five crude grades underpinning the benchmark.
Brent had reached $65.83, its highest since mid-2015, on December 12.
Ineos, operator of the Forties pipeline, said today it was moving forward with a preferred repair option and the timeframe for the fix remained two to four weeks starting from December 11, the date of the shutdown.
Oil prices moved higher after reports that a missile was fired at Riyadh from Yemen, but pared gains after Saudi Arabia said it intercepted the missile and no casualties were reported.
A deal by the Organisation of the Petroleum Exporting Countries and non-member producers including Russia to cut supplies to curb a supply glut that has built up since 2014 has also boosted prices.
OPEC and its allies have extended the agreement until the end of 2018 and Russia's Rosneft said yesterday it could be maintained beyond next year.
As a result of the cuts, oil inventories are falling globally and the latest weekly supply reports are expected to show a further reduction in US crude inventories.