Oil prices halted their downward slide Tuesday but remained below the $50 mark amid doubts that the global crude glut is being drained.
U.S. crude futures settled up 33 cents, or 0.67%, at $49.56 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 50 cents, or 0.97%, to $52.10 a barrel on ICE Futures Europe.
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The move higher came after a six-day losing streak, and reversed losses in earlier trading Tuesday.
"We've been down so many days in a row, it doesn't surprise me to see a pop to the upside," said Tariq Zahir, managing member of Tyche Capital Advisors. Still, he said investors would likely have to see a "significant draw" from oil and gasoline stockpiles in data due Wednesday in order to move prices much higher. "I think it's kind of a wait-and-see attitude," he said.
The U.S. Energy Information is set to provide its weekly snapshot of oil and fuel inventories Wednesday at 10:30 a.m.
Analysts, traders and brokers surveyed by The Wall Street Journal forecast that crude supplies fell by 600,000 barrels last week. They're also predicting that gasoline stockpiles fell by 900,000 barrels.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed an 897,000-barrel increase in crude supplies, a 4.4-million-barrel increase in gasoline stocks and a 36,000-barrel decline in distillate inventories, according to a market participant.
Before Tuesday, oil prices had been on the decline since last week, reflecting investor concern about the strength of rebounding U.S. oil production and ebbing faith that the Organization of the Petroleum Exporting Countries can effectively lead the market back into balance after several years of oversupply.
"Without signs that the overhang in the market is being eliminated, the market is showing real trouble justifying plus-$50 oil," said Gene McGillian, research manager for Tradition Energy.
OPEC and other major producers have agreed to cut production by 1.8 million barrels a day in the first half of 2017. But because stocks have remained high, traders and investors are now watching to see whether the cartel will extend the deal when it meets in May.
"Until OPEC announces an official decision on whether to extend the production cuts, the main focus of the market will be on that," said Nelson Wang, an energy analyst at CLSA.
And with uncertainty about whether the cuts will continue, market participants have turned their focus to signs that U.S. production will come on strong. Analysts say the recent downtrend may persist as U.S. oilfield-service companies, namely drillers, still have plenty of spare capacity.
Mr. Wang estimates only around 70% of available oil rigs in the U.S. are currently in operation despite persistent growth this year in drilling activity there. Baker Hughes's closely watched rig count is at its highest level in nearly two years.
"This means there is a lot of upside risk to U.S. supplies," he said.
Gasoline futures rose 0.16 cent, or 0.1%, to $1.6230 a gallon. Diesel futures rose 0.25 cent, or 0.16%, to $1.5452.
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(END) Dow Jones Newswires
April 25, 2017 17:03 ET (21:03 GMT)