Oil prices advanced Tuesday morning, retracing some of the prior day's losses on the expectation of a further drawdown in U.S. crude inventories.
Brent crude, the global benchmark, was up 0.6%, at $51.96 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up around 0.4%, at $47.73 a barrel.
The market is anticipating a further reduction in U.S. stocks when the American Petroleum Institute, an industry group, releases preliminary data for last week on Tuesday afternoon, said Ehsan Ul-Haq, a director at energy consultancy Resource Economist Ltd. That set of data will be followed by weekly official data from the U.S. Energy Information Administration on Wednesday.
"We are gradually seeing falling stocks in the U.S.," Mr. Ul-Haq said.
The EIA said last week that crude inventories had been reduced by 9 million barrels in the week ended Aug. 11, bringing the total drawdown since March to 69 million barrels.
However, analysts have cautioned the decline in inventories could be partly reversed after the busy summer driving season ends and the refinery maintenance period gets under way in autumn.
"With the U.S. summer driving season drawing to an end and refinery turnarounds fast approaching, there may be some unpleasant surprises in store for oil bulls," said Stephen Brennock, an analyst at oil brokerage PVM Oil Associates, in a report Tuesday morning.
Meanwhile, a technical meeting Monday in Vienna between the Organization of the Petroleum Exporting Countries and non-OPEC signatories to the cartel's production cut deal yielded "little in the way of fresh news," with officials delaying a decision on whether to extend output cuts until an official meeting in November, according to analysts at ING Bank.
OPEC and 10 producers outside the cartel, including Russia, first agreed late last year to cap production at around 1.8 million barrels a day lower than peak Oct. 16 levels, with the aim of reining in the global oil glut and sending prices higher.
The deal, which was extended in May until March 2018, has been undermined by falling compliance and an unexpected surge in production from Libya and Nigeria--two member states exempted from the agreement because their oil industries had been damaged by civil unrest.
At the Vienna meeting, officials said compliance with the cuts fell in July as a result of high output by Iraq and the United Arab Emirates, dropping to 94% compared with 98% conformity in June, according to people familiar with the matter.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was up 0.5%, at $1.5035 a gallon. ICE gasoil changed hands at $470.00 a metric ton, down 0.2% from the previous settlement.
Summer Said and Benoit Faucon contributed to this article.
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(END) Dow Jones Newswires
August 22, 2017 06:40 ET (10:40 GMT)