Oil prices edged up yesterday, holding above $55 a barrel as a weakening dollar offset losses after Saudi Arabia indicated it was now pumping near a record high of 10 million barrels per day.

Saudi Arabia has stood firm on output, saying it would only consider cutting it if other producers outside Opec also joined.

Brent crude oil futures were trading up 8 cents at $55.40 a barrel at 0933 GMT, after hitting a low of $54.12. US WTI crude was down 40 cents at $46.17.

Saudi Oil Minister Ali al Naimi also said the kingdom was now pumping around 10 million barrels per day (bpd), which could indicate an increase of 350,000 bpd over its February production.

Analysts at Barclays forecast yesterday that if Opec production held near current levels of near 30 million bpd, the market surplus would expand from 900,000 bpd to 1.3 million bpd.

Oil prices have see-sawed, weighed down by concerns of oversupply but boosted by swings in the strength of US dollar ahead of the expected end of years of zero interest rate policy in the US later this year.

China boosted overall imports late last year, taking advantage of cheap oil to build its reserves

Yesterday, oil prices pared losses after the dollar renewed its slide.

“In the past 15 years, the global economy was defined by rising commodity prices, zero interest rate policy, and a weak USD. This cycle has now gone into reverse with a decelerating industrial economy in China and the rise of US shale,” Bank of America Merrill Lynch said in a report.

“A combination of a strong dollar, higher interest rates and subdued growth may keep commodity prices in check in 2015,” it added.

China’s February crude oil imports from Iran fell 3.7 per cent from a year ago to 2.04 million tons. China boosted overall imports late last year, taking advantage of cheap oil to build its reserves, but storage tanks could be reaching their limits, forcing a slowdown in orders.