Oil held near USD 51 a barrel as investors weighed if OPEC and its allies can successfully revive the market while US production continues to grow.

Futures in New York gained 0.4 percent after losing 2.7 percent last week. While the number of oil rigs in the US fell to the least in eight weeks, investors are grappling with concerns rising American output will quash any price rallies. Hedge funds slashed bullish bets on West Texas Intermediate crude to the lowest in more than two years, showing they are not buying into the OPEC+ coalition's production cuts just yet.

Crude remains near its lowest level in more than a year despite larger-than-expected output curbs by OPEC+ and the prospect that unplanned losses in Iran and Venezuela will exacerbate the group’s cuts. The International Energy Agency and OPEC itself have warned of a potential surplus next year. Still, US crude inventories have dropped for two weeks and persistent infrastructure bottlenecks could limit immediate production increases in shale fields.

"The market is in a bit of a wait-and-see mode, waiting for guidance from the US on whether crude inventory draws will continue," said Giovanni Staunovo, a commodities analyst at UBS Group AG. "The oil market will tighten beyond current bearish expectations over the coming months as Iranian and Venezuelan output is likely to fall further."

West Texas Intermediate for January delivery traded at USD 51.39 a barrel on the New York Mercantile Exchange, up 19 cents, at 10:03 a.m. in London. The contract fell USD 1.38 on Friday. Total volume traded Monday was about 23 percent below the 100-day average.

Brent for February settlement added 33 cents to USD 60.61 a barrel on London's ICE Futures Europe exchange, after dropping USD 1.17 on Friday. The global benchmark crude traded at an USD 8.88 premium to WTI for the same month.

US. drillers will produce an average 12.06 million barrels a day next year, up from 10.88 million in 2018, the Energy Information Administration said last week. Weekly crude output remains near a record high even as Baker Hughes data on Friday showed working oil rigs fell by four to 873 last week.

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