“There is a strong pick up in rigs, particularly in the Permian region, indicating somewhat of a cap on oil prices,” said Giovanni Staunovo, commodity analyst at UBS Wealth Management, of the ramp up of shale oil drilling in the U.S.

Oil prices have hit three-year highs this month on the back of strong demand, geopolitical risks, a weaker U.S. dollar and efforts by the Organization of the Petroleum Exporting Countries to curb supply. But the higher prices have motivated U.S. shale producers to increase production, a move analysts say could limit further gains in oil prices.

“The improving price backdrop will spur additional output from U.S. shale producers,” according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd. “This has been the long-running thorn in the side of OPEC and its goal of normalizing global oil stocks,” Mr. Brennock wrote in a note Monday.

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