Oil prices rise on signs of tightening market

Oil prices rose on Tuesday, lifted by indications that supply may be tightening gradually, especially in the United States.

Benchmark Brent crude oil was up 20 cents at $51.86 a barrel by 0930 GMT. U.S. light crude was 15 cents higher at $47.52.

"U.S. crude oil stocks have been falling consistently in recent weeks," said Fawad Razaqzada, market analyst at futures brokerage Forex.com.

"If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia," he added.

U.S. commercial crude inventories have fallen by almost 13 percent from their March peaks, to 466.5 million barrels.

The Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back around 1.8 million bpd of output between January this year and March 2018 in order to tighten supplies and prop up prices.

But oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.

U.S. crude production has broken through 9.5 million barrels per day (bpd), its highest since July 2015.

Some analysts say U.S. oil output growth will slow as energy firms cut the number of rigs drilling for oil.

So far, however, the increase in U.S. production has been relentless with increasing volumes from shale, particularly from the giant Permian basin in Texas and New Mexico.

"With U.S. shale oil production proving more than resilient, the autumn period presents a lot of downside risk to oil prices," Harry Tchilinguirian, chief oil market strategist at French bank BNP Paribas, told Reuters Global Oil Forum.

The weekly rollout of data on U.S. inventories starts later on Tuesday, giving the market a chance to see if the recent downward trend in U.S. crude stocks is continuing.

Industry group the American Petroleum Institute will publish statistics on crude inventories and refinery operations for last week at 4:30 p.m. EDT (2030 GMT).

On Wednesday, it will be the turn of the U.S. government`s Energy Information Administration.

U.S. crude inventories are expected to have fallen for an eighth straight week and drop by 3.4 million barrels, a Reuters poll shows.

"Another decline in U.S. crude stocks may push prices somewhat higher again, but the upside may be limited - especially if U.S. crude production ticks higher again," said Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)