MarketWatch- Feb 2, 2017 – Crude-oil futures fell on Thursday, as traders pared bullish bets after prices rallied overnight to their highest level in nearly a month.

Light, sweet crude for March delivery CLH7, -0.11%  fell 26 cents, or 0.5%, to $53.62 a barrel in the Globex electronic session of the New York Mercantile Exchange. Brent crude for April LCOJ7, +0.07%  lost 22 cents, or 0.4%, to $56.58.

Futures eased in after-hours trading following a surge of more than 2% for both benchmarks on Wednesday. Prices soared following a report from the U.S. Energy Information Administration showing a decline in domestic production, even as oil inventories rose by more than expected in the week ended Jan. 27.

Still, many market watchers said prices are likely to stay in a narrow range for the time being, with prices caught between the production cut by major oil-producing nations and the prospect for renewed U.S. oil drilling.

“Price action remains contained in a $50 [to] $55 range for now,” wrote Stuart Ive of OM Financial.

Prices have stayed in that range for weeks as traders await additional signs of compliance with the agreed cuts by the Organization of the Petroleum Exporting Countries. Some indications of follow-through have emerged in recent weeks, with JBC Energy saying OPEC has reduced output by just over one million barrels a day, or 88% of the pledged cuts.

Meanwhile, U.S. oil output remains on an uncertain course. EIA data Wednesday showed a 46,000-barrel-a-day fall in U.S. oil output, belying expectations that higher oil prices would be met with a sharp jump in shale output. In recent weeks, data has showed more drilling rigs being put back to work in the wake of OPEC’s stated cuts.

Analysts were also weighing up news that the White House has condemned a recent Iranian ballistic missile test launch and warned of potential consequences, such as new sanctions. “As of today, we are officially putting Iran on notice,” National Security Advisor Mike Flynn said Wednesday.

“These tensions could make investors a little nervous and we could see the oil market becoming volatile once again,” said Naeem Aslam, chief market analyst at ThinkMarkets UK, in a note to clients.

Nymex reformulated gasoline blendstock for March RBH7, +0.32%  — the benchmark gasoline contract — rose 2 points to $1.5793 a gallon, while March diesel traded at $1.6707, 33 points lower.

ICE gasoil for February changed hands at $499.50 a metric ton, up $1.25 from Wednesday’s settlement.