Oil prices have risen higher reaching new two-month highs and on track to post the strongest weekly percentage gains this year as investors digested signs of an easing oversupply.
Brent crude futures reached a new two-month high of 52.02 dollars a barrel.
US West Texas Intermediate (WTI) crude futures were up 30 cents at 49.34 dollars a barrel, after also touching a fresh two-month peak of 49.38 dollars a barrel.
Both contracts are set to post their biggest percentage gains this year with a rise of around eight per cent.
US crude and gasoline inventories fell much more steeply than expected this week and the world’s biggest oil exporter Saudi Arabia said it would further reduce oil
output in August.
“Positive signs came from the draw in gasoline stocks this week, as the US moves into the peak driving season,” said Ashley Kelty, oil analyst at Cenkos Securities.
US crude stocks fell sharply by 7.2 million barrels in the week to July 21 due to strong refining activity and an increase in exports, according to data from the Energy Information Administration (EIA).
Brimming US crude supplies have been a challenge to production cuts to prop up prices led by the Organisation of the Petroleum Exporting Countries, meaning weekly US inventory data is closely watched.