Oil rebounded from the lowest close in more than two weeks after industry data showed USA crude stockpiles extended declines, easing an inventory overhang.
"US oil inventories will decline seasonally in the summer months, but will remain well above the five-year average", Commerzbank analyst Carsten Fritsch said.
Both crude benchmarks fell by about 3 percent to three-week lows on Wednesday after news that an increase in Libyan oil production helped to boost monthly OPEC crude output in May, the first monthly rise this year.
Benchmark Brent crude futures were off by almost 3% at $49.14 per barrel (bbl) at 5:34 a.m. CT (10:34 GMT), down $1.49 from the previous close.
On the New York Mercantile Exchange, crude futures for July delivery fell 70 cents to settle at $47.66 a barrel, while on London's Intercontinental Exchange, Brent dipped by 47 cents to trade at $50.16 a barrel.
"This could lead to a drilling free for all in the USA and also see other signatories waver in their commitments", said Jeffrey Halley, a senior market analyst at OANDA.
Data from the American Petroleum Institute (API) showed crude inventories were down by 8.7 million barrels at 513.2 million in the week to May 26.
Crude oil prices were flat to slightly lower in early Thursday trading as consumer demand issues balance against a large draw in oil inventories.
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"In "red" market s a heavy oil price and a somewhat stronger EUR have returned EUR/NOK to the mid 9.40s".
The U.S. withdrawal from the landmark 2015 global agreement to fight climate change drew condemnation from Washington's allies - and sparked fears that U.S. oil production could expand even more rapidly.
While there are signs that an effort led by the Organisation of the Petroleum Exporting Countries (Opec) to curb production by nearly 1.8 million barrels per day (bpd) is starting to impact actual supplies, traders said ongoing increases in USA output were undermining those cuts.
Shipping data on Thomson Reuters Eikon shows that, excluding pipeline exports, Libya shipped an average of 500,000 bpd of oil so far this year, compared with 300,000 bpd average for 2016.
Rising output from OPEC members Nigeria and Libya, which are exempt from the deal, is also undercutting the attempt to limit production.
Reuters sources say OPEC officials discussed deepening the cuts last week and could revisit the proposal.
Libya's oil production has risen to 827,000 bpd after technical problems were resolved at the Sharara field.
"Growing demand will be the main factor draining the global oil surplus, but generally at a slower pace than perceived", said Norbert Ruecker, head of macro and commodity research at Julius Baer.
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