By Timothy Puko, Kevin Baxter and Jenny W. Hsu 

Oil prices fell Monday on worries over a potential resurgence of U.S. shale production despite more confidence at OPEC that last year's agreement to lower production is holding.

Light, sweet crude for March delivery settled down 47 cents, or 0.9%, at $52.75 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, lost 26 cents, or 0.5%, to $55.23 a barrel on ICE Futures Europe.

The resurgence of shale oil comes after a long period of cutbacks and dozens of bankruptcies. But as oil prices moved toward $50 a barrel and have now held above it, many shale players are putting rigs back to work and increasing spending.

Cuts promised by the Organization of the Petroleum Exporting Countries and other exporters have made prices high enough for U.S. drillers to be profitable. Many analysts expect U.S. producers to fill in at least some of the supply those exporters are cutting.

That belief got a major boost late Friday by data from industry group Baker Hughes showing the number of working oil rigs in the U.S. climbed by 29 in the week ended Jan. 20 to a total of 551. That is the largest one-week increase in nearly four years, and puts the active oil rig count at its highest level in 14 months.

"U.S. rig counts are exploding," Scott Shelton, broker at ICAP PLC, said in a note to clients.

Société Générale SA analyst Michael Wittner told The Wall Street Journal it is "kind of an eye-popping number."

Goldman Sachs said in a note released to the press Monday that the rig count at current levels would cause a year-over-year production increase of 315,000 a day for key western shale-drilling fields by the fourth quarter. It did, however, say that total U.S. production could still decline by then unless U.S. producers keep turning on backlogged wells that are sitting unfinished.

Mr. Wittner also warned that a likely increase in oil is still months away and may be only half of what OPEC and its allies cut back.

Saudi Arabia's energy minister, Khalid al-Falih, just announced that the 20 nations that have agreed to rein in output are showing "very good compliance."

According to OPEC, the cartel's members and 11 non-OPEC producers have cut 1.5 million barrels a day from the global oil market, representing more than 80% of the amount pledged. The news was announced at a compliance meeting in Vienna that took place Sunday.

Oil traders sold off despite the news. Germany's Commerzbank said that the production cuts had already been priced in by the market so there was no real chance of them providing any significant tailwind for markets. ICAP's Mr. Shelton also said Mr. al-Falih may have convinced traders to sell now that the bullish news of high initial compliance has passed.

Investors have been widely speculating on rising prices. Money managers in the week ended Tuesday put on more bullish oil positions than any other week since 2006, and their bullish bets outnumbered their bearish ones by the widest margin since June 2014. That imbalance can often lead rallies to deflate as those investors cash out their bets or because there may be fewer traders left willing to buy.

Some market observers have yet to be fully convinced that the cuts are happening as stated, skepticism that could be putting a cap on gains in crude prices. The cuts are no doubt positive, but a high level of caution is warranted until all of the data has been verified by independent third-party sources, with more production reports due in weeks to come, analysts said.

Mr. al-Falih's data simply weren't that convincing for many traders, said Peter Donovan, broker for Liquidity Energy LLC in New York. Many expected leaders of OPEC to make these types of claims, and once they passed, they sold off hard on the prospects of new drilling and production in the U.S., he added.

OPEC is "off to a gradual start," Mr. Donovan said, unimpressed. "It's nothing that was particularly bullish."

Gasoline futures gained 0.04% to $1.5667 a gallon. Diesel futures fell 1.2% to $1.6265 a gallon, its fourth loss in six sessions.

Write to Timothy Puko at tim.puko@wsj.com, Kevin Baxter at Kevin.Baxter@wsj.com and Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

January 23, 2017 15:40 ET (20:40 GMT)