Oil prices were little changed Wednesday after U.S. crude stockpiles plunged their most in nearly a year, paring gains seen early in the session.
U.S. crude inventories dropped for a seventh consecutive week, falling 8.95 million barrels last week to 466.5 million barrels to their lowest since January 2016. Including emergency reserves, crude stocks were at 1.15 billion barrels, the lowest levels since October 2015, the Energy Information Administration said.
The decline confirmed Tuesday`s data from the American Petroleum Institute which showed crude inventories dropped 9.2 million barrels in the week to Aug. 11.
That compared with analysts` expectations for a decrease of 3.1 million barrels.
The metric is closely watched by the Organization of the Petroleum Exporting Countries and other oil producers which have curtailed output to boost prices.
"I would describe this as a bullish report and probably the effect would be we`re going to keep ourselves pinned here waiting for the next signal," said Gene McGillian, director of market research at Tradition Energy.
Seasonally, U.S. demand usually picks up during the summer. "If we see these draws past Labor Day, it will drive the market, possibly past $50.
Brent crude futures were up 17 cents at $50.97 per barrel by 10:49 a.m. EDT (1449 GMT), after earlier trading as high as $51.40.
U.S. West Texas Intermediate (WTI) crude futures were at $47.53 a barrel, down 2 cents, after earlier rising to $47.99.
More broadly, analysts said ample supplies were preventing prices from moving much higher.
"This bullish print is being tempered somewhat by unchanged gasoline inventories versus the expectation of a draw," said Matt Smith, director of commodity research at ClipperData.
"The peak of summer driving season has now passed, and demand for crude should wane also as refinery runs drop, Gasoline demand will ebb as summer road trips are mostly over and children head back to school.
U.S. gasoline stocks were unchanged, compared with analysts` expectations in a Reuters poll for a 1.1 million-barrel drop. OPEC and other major producers including Russia have pledged to restrict output by 1.8 barrels per day between January this year and March 2018.
Offsetting much of that effort, however, U.S. oil production has soared by almost 12 percent since mid-2016 to 9.5 million bpd.
"OPEC and Russia still face an uphill battle in reducing the global supply surplus in the face of growth in output elsewhere and less than compliant behaviour in their midst (Iraq, UAE)," French bank BNP Paribas said.
OPEC member Angola released a loading plan showing October exports were planned at a 13-month high.
On the demand side, analysts see a gradual slowdown in fuel consumption growth.
In the United States, energy consultancy Wood Mackenzie said gasoline demand was already peaking due to improving fuel efficiency and the rise of electric vehicles.
In China, state-owned China National Petroleum Corporation (CNPC) said gasoline demand would likely peak around 2025 and outright oil consumption would top out around 2030.
This means that oil demand from the world`s two biggest consumers may soon stall, while consumption has already peaked in Europe and Japan.