By Jenny W. Hsu 
 

Crude futures moved higher in Asia Tuesday as investors held on to their bullish positions, betting on the supply to tighten as major oil producers cut their output.

On the New York Mercantile Exchange, light, sweet crude futures or the West Texas Intermediate for delivery in March traded at $53.70 a barrel at 0152 GMT, up $0.30 in the Globex electronic session. April Brent crude on London's ICE Futures exchange rose $0.04 to $56.22 a barrel.

"Despite prices stuck in a tight trading range, Commodity Futures Trading Commission data showed investors raised their net long positions in WTI and Brent to a record high level," said ANZ Research.

Last week, hedge funds and other big money managers increased their net long position--a bet on rising prices--in Brent crude oil to the highest level since records started in 2011, the Intercontinental Exchange Inc. said Monday. This mirrors the U.S., where funds have raised their bullish bets to a fresh record.

Optimism in the market stems from the high compliance rate of over 90% from a group of oil producers who have agreed to curtail their production. The pact, signed last year, calls for the group to cut their collective daily production by 1.8 million barrels.

This joint effort by the Organization of the Petroleum Exporting Countries and 11 other non-cartel producers is expected to push global oil prices to $60 a barrel by the end of the year, despite the growth in U.S. supply, said Gordon Kwan, the head of Asia oil and gas at Nomura.

He pointed out that the world's crude demand is expected to grow by 1.4 million barrels a day in 2017. Assuming that the OPEC-led initiative maintains a 90% compliance rate translating to around 1.5 million barrels a day, the market could see a combined shortage of 2.9 million barrels a day.

"There is no way that the U.S. can make up the differences," said Mr. Kwan, adding that despite the rise in oil drilling activities in the U.S., shale producers are expected to add at most around 1 million barrels a day to the market.

However, other analysts view U.S. oil as a real threat that could delay the market from rebalancing as drillers there have invested heavily to increase efficiency and reduce production costs. As the U.S. oil production balloons, so has its exports.

BMI Research notes crude exports from the U.S. reached a record high in the week ended February 10, with most of the volume directed to Asia--the fastest growing market and the longstanding battleground for OPEC nations.

In fact, OPEC's top producers are prioritizing trades with Asia over the U.S. and Europe in order to maintain market shares, the firm added.

"You can say the U.S. is the counterforce against OPEC," said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.

Nymex reformulated gasoline blendstock for March--the benchmark gasoline contract--fell 116 points to $1.5050 a gallon, while March diesel traded at $1.6465, 101 points higher.

ICE gasoil for March changed hands at $497.00 a metric ton, down $0.50 from Monday's settlement.

Georgi Kantchev contributed to this article.

Write to Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

February 20, 2017 22:55 ET (03:55 GMT)