Oil rose above $48 a barrel on Wednesday in response to a fall in US fuel inventories and a cut in the US government's forecast for crude output next year, which raised hopes that a supply glut is easing.
Brent crude, the global benchmark, was up 86 cents, at $48.38 a barrel on Wednesday. US West Texas Intermediate crude gained 93 cents to $45.97, CNBC reported.
US crude inventories fell by 8.1 million barrels, industry group the American Petroleum Institute said on Tuesday, much more than the forecast. Official inventory data from the Energy Information Administration were due later on Wednesday.
"While further upside could be expected in the short term amid the speculations of a cut in US production, gains may be limited by the firm oversupply dynamics of the markets," FXTM analyst, Lukman Otunuga, said.
The US crude stocks' drop will raise hopes that a long-awaited market rebalancing is underway. A supply glut has stuck around for three years, despite an OPEC-led output cut in 2017, keeping oil at less than half its price of mid-2014.
A supply cut led by the Organization of the Petroleum Exporting Countries has lent prices some support, but in recent weeks rising output from Libya and Nigeria-OPEC members exempt from the deal-has pushed supply higher.
OPEC production has risen in June by more than 300,000 barrels per day, according to figures seen by Reuters that the exporter group uses to monitor its supply, as more oil from the exempt countries countered high compliance by many others.
Top exporter Saudi Arabia plans to export less. A Saudi industry source said on Wednesday Riyadh planned to cut shipments in August by more than 600,000 bpd, taking exports for that month to their lowest level this year, to balance a seasonal rise in domestic use.
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