Oil prices recovered Thursday after an industry group said U.S. inventories fell last week.
The American Petroleum Institute said late Wednesday its data for the week ended June 30 showed a 5.8-million-barrel decrease in crude supplies and 5.7-million-barrel fall in gasoline stocks.
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"The market is very excited about the falling inventory," said Bjarne Schieldrop, chief commodities analyst at SEB Markets.
Brent crude, the global oil benchmark, rose 1.32% to $48.42 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.40% at $45.76 a barrel.
Investors are waiting to see if there will be a similar drop of oil supply reported in the U.S. Energy Information Administration data scheduled to be released later Thursday, which could provide further support to crude oil prices, according to analysts at ING Bank.
Still, it will be difficult for prices to sustain a continued upward trend, analysts said.
"The scope for further price rises is gradually diminishing," said a note from Commerzbank.
Oil's rally in recent weeks was spurred in part by early signs that U.S. production may not be as resilient in the face of low prices as many believed. But that rally was always tentative and fueled largely by investors trying to cover short positions, rather than a real shift in sentiment, said Michael Hiley, a trader at LPS Futures LLC.
Reports Russia wouldn't support more production cuts with the Organization of the Petroleum Exporting Countries had pressured the price Wednesday. Adding to oil's headwinds, Libya and Nigeria, OPEC members that were exempt from production quotas, have been continuing to ramp up output, undermining the effect of the production caps from other members.
Persistently high global stockpiles and the threat of new U.S. oil flooding into already brimming storage tanks pushed the market into a steep decline in June.
Tariq Zahir, managing member of Tyche Capital Advisors, said OPEC's deal may be starting to fray. "I do think we're going to start seeing some cheating going forward," he said. "That eight-day rally was definitely overdone. I shorted the heck out of it."
Nymex reformulated gasoline blendstock was up 1.2% at $1.50 a gallon while ICE gas oil rose 0.4% to $443.75 a metric ton.
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(END) Dow Jones Newswires
July 06, 2017 07:24 ET (11:24 GMT)