Crude oil prices turned positive on Tuesday, reversing course on reports that Saudi Arabia has told OPEC officials it wants to continue output cuts for an additional six months.
Oil futures have been pinned in a range, supported by production cuts from the Organization of Petroleum Exporting Countries cartel and other producing states but capped by rising U.S. shale oil production.
The market, which retreated early in U.S. trading, turned positive after reports that Saudi Arabia said it wants to extend production cuts enacted in January for another six months when the group meets in May, according to the Wall Street Journal. OPEC members have previously said they lean toward oil cut extensions, as long as non-members are also involved.
Brent crude LCOc1, the international benchmark for oil, settled up 25 cents at $56.23 a barrel, its highest since March 7.
Brent has risen in each of the previous seven sessions, while WTI gained for the last six. Early in the day, prices had retreated on expectations U.S. inventories could climb again.
U.S. West Texas Intermediate (WTI) CLc1 rose 32 cents to $53.40 a barrel, surpassing a five-week high.
In post-settlement trade both grades got a boost as industry group the American Petroleum Institute said U.S. crude inventories has fallen by nearly 1.3 million barrels a day, defying expectations that they would increase 87,000 barrels in the week.
U.S. crude inventories have touched record highs at the U.S. storage hub of Cushing, Oklahoma, and in the U.S. Gulf Coast in recent weeks, according to U.S. government data. If confirmed by U.S. Energy Information Administration figures on Wednesday, oil could get another boost.
Analysts said, however, that there are worries demand growth could falter, and other indicators were warning that the market had not yet cleared enough of its surplus to keep prices rising.