Oil prices were stable on Friday, supported by expected supply cuts from OPEC but held back by record US production.

US West Texas Intermediate (WTI) crude oil futures were at 56.5 US dollars per barrel at 0132 GMT, up 12 cents from their last settlement.

Brent crude oil futures were up seven cents at 66.69 US dollars per barrel.

Prices were mainly supported by expectations the Organization of the Petroleum Exporting Countries (OPEC) would start withholding supply soon, fearing a renewed rout such as in 2014 when prices crashed under the weight of oversupply.

However, Morgan Stanley warned a cut by the Middle East dominated producer cartel may not have the desired effect.

“The main oil price benchmarks - Brent and WTI - are both light-sweet crudes and reflect this glut,” the US bank said.

“OPEC production cuts are usually implemented by removing medium and heavier barrels from the market but that does not address the oversupply of light-sweet.”

Due to the structural oversupply that has emerged in the market from record production by many countries, Morgan Stanley said that “OPEC cuts are inherently temporary [because] all they can do is shift production from one period to another”.

While OPEC considers withholding supply, US crude oil production reached another record last week, at 11.7 million barrels per day (bpd), according to US Energy Information Administration data published on Thursday.

US output has surged by almost a quarter since the start of the year.

The record output meant US crude oil stocks posted the biggest weekly build in nearly two years.

Crude inventories soared 10.3 million barrels in the week to November 9 to 442.1 million barrels, the highest level since early December 2017.

This surge contributed to oil prices falling by around a quarter since early October, taking many by surprise.

“Oil bulls, us included, have capitulated and we no longer see oil climbing to 95 US dollars per barrel next year,” Bank of America Merrill Lynch said in a note.

While sentiment has turned bearish, some analysts warn that 2019 could be tighter than expected.

“We expect 2019 oil demand to reach 101.1 million bpd,” natural resources research and investment firm Goehring & Rozencwajg said, up from just under 100 million bpd this year.

At the same time, the firm said production outside North America was set to disappoint.