By Barani Krishnan
NEW YORK (Reuters) - Oil prices rose on Monday as data showed a drawdown at the Cushing, Oklahoma delivery hub for U.S. crude and ahead of front-month contract expiry in the U.S. crude futures.
The market's upside was limited by concern that U.S. oil drillers could ramp up output again after a two-month long recovery in crude prices, analysts said.
Brent crude futures for May delivery, the front-month, were up 10 cents at $41.30 a barrel by 12:05 p.m. EDT (1605 GMT). Brent has risen 53 percent from 12-year lows of $27.10 hit on Jan. 20.
U.S. crude's futures for April, which expires as the front-month at Monday's settlement, gained 44 cents to $39.88. U.S. crude's more-active May contract, which would be front-month from Tuesday, rose 27 cents to $41.41.
Crude stockpiles in Cushing fell 570,574 barrels to 69.05 million in the week to March 18, traders said, citing data from market intelligence firm Genscape. Cushing inventories had previously risen toward 70 million barrels, causing market participants to fear they could hit capacity.
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"Although, it's not huge draw by any means, the latest data breaks a string of builds," said Peter Donovan, broker at Liquidity Energy in New York.
Some analysts were concerned that U.S. oil production was rising.
On Friday, data from another industry firm, Baker Hughes, showed U.S. energy companies added one oil rig last week after 12 weeks of cuts.
Analysts generally agreed it was early to read too much far into that rise, since oil rigs had fallen by two-thirds over the past year to their lowest since 2009. Still, there were signs the drop-off in drilling was stabilizing after a 50-percent rally in crude prices since February.
"The higher prices go in the current recovery rally, the higher the likelihood that U.S. producers are going to build their hedge portfolios, which could then result in U.S. oil production not declining as much as what the current forecasts are showing," said Dominick Chirichella, senior partner at he Energy Management Institute, New York.
U.S. crude hit 2016 highs of $42.52 on Friday.
Some U.S. shale oil producers, including Oasis Petroleum and Pioneer Natural Resources Co, are activating drilled but uncompleted wells (DUCs) in a reversal in strategy that threatens to bring more crude to a saturated market and dampen any sustained rebound in prices.
Data from the U.S. Commodity Futures Trading Commission (CFTC) on Friday also showed money managers had raised bullish bets on U.S. crude to a five-month high during the week to March 15.
(Additional reporting by Amanda Cooper in LONDON; Editing by Mark Trevelyan and Louise Heavens)