Oil prices fell after a three-day rally ran out of steam as a higher US rig count signalled rising production from shale, contributing to the global supply glut.

Prices have been locked within a range during the first quarter as traders searched for signals that the Organisation of the Petroleum Exporting Countries' production cuts are effective or that US production is continuing to offset efforts to rebalance the market.

Brent crude futures have recorded the biggest losses across global asset classes this quarter. In March, the contracts posted the biggest monthly losses since July as growing US crude inventories and drilling activity counterbalanced production cuts elsewhere in the world.

Brent futures settled down 13 cents at $US52.83 a barrel. The contracts have lost around 7 per cent since the previous quarter, the largest quarterly losses since late 2015.

US crude futures settled up slightly, rising 25 cents to $US50.60 a barrel after slipping below $US50. They ended the quarter at about 5.7 per cent lower, also the worst quarterly loss since late 2015.

Oil prices had gained momentum this week on a growing sense that OPEC and nonmember Russia would extend their production cut, seeking to drive the market higher.

"There's resistance at $US52 to $US53 a barrel," said Tony Headrick, energy market analyst CHS Hedging. Additionally, the WTI-Brent spread, which widened early in the month, narrowed to the tightest since March 3, after exports picked up last week, he said.

The US energy department on Friday released supply and demand figures for January, the latest month available, saying the country's oil demand for that month was up 0.9 per cent at 19.234 million barrels per day, while production rose 60,000 bpd to 8.835 million barrels.

Energy services firm Baker Hughes said US oil rigs increased by 10 to 662 in the week, making the first quarter the strongest for oil rig additions since mid-2011.

The indicator has shown huge gains, with the rig count doubling in a 10-month recovery and undermining efforts led by OPEC to rein in output.

"I wouldn't be surprised to see some profit-taking ahead of the weekend after the strong gains in recent days," said Carsten Fritsch, commodity analyst at Commerzbank.

OPEC and non-OPEC producers including Russia agreed late last year to cut output by almost 1.8 million barrels per day in the first half of 2017 to ease a global supply overhang and prop up prices.

Nevertheless, analysts polled on a monthly basis by Reuters have slightly lowered their oil price expectations for this year.

Brent crude is expected to average $US57.25 per barrel in 2017, slightly lower than last month's forecast of $US57.52, the poll of 32 economists and analysts showed.

Forecasts for Brent in 2017 range from a high of $US73 by Raymond James to a low of $US51 by Commerzbank.

Record high US stocks have led speculators to cut holdings of US crude oil futures and options to the lowest since December.

"The initial liquidation in net long positions is a concern; it reflects weaker market confidence in oil prices, amid rising US shale investment and production," said Cailin Birch, an analyst at the Economist Intelligence Unit.

The risk of an even faster sell-off will be seen as a major risk by most oil-producing countries, providing further motivation for the OPEC deal to be extended, Birch added.

The Reuters survey forecast US WTI crude futures would average $US55.29 a barrel in 2017, marginally lower than last month's forecast of $US55.66.