Oil prices pared early gains on Thursday despite USA industry data showing a big drop in crude stocks last week, with investors sceptical that OPEC-led cuts will be enough to rebalance an oversupplied market.
API figures showed that USA crude inventories fell by 8.7 million barrels to 513.2 million in the week to May 26, compared with analyst expectations for a decrease of only 2.5 million barrels.
Brent crude futures for July LCOc1 gained 58 cents to touch $51.34 a barrel, while the US West Texas Intermediate crude CLc1 futures climbed 64 cents and traded at $48.96, reported Reuters.
The global oil market reacted Wednesday to the news that Libya, one of the major oil producers in the Organization of Petroleum Exporting Countries (OPEC), was increasing its crude output to 827,000 barrels per day.
If that happened, the US could surpass Saudi Arabia as the world's No. 2 oil producer.
The US Energy Information Administration (EIA) report on stockpiles is due later on Thursday, delayed by a day because of the Memorial Day holiday on Monday.
A crude price in the $50s is the new reality for bosses of some of the world's largest producers as output caps from Organisation of Petroleum Exporting Countries (Opec) and its allies are balanced out by rising USA shale.
Faced with lingering glut woes, the oil cartel discussed last week reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, according to sources.
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"The failure of members participating in the deal to deepen cuts leaves the pace of rebalancing being dictated by the oil-output profile in the United States", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics.
Oil markets edged higher on Monday as rising Saudi physical prices and signs of falling OPEC supplies slightly outweighed a persistent rise in United States production.
On Friday, Igor Sechin, chief of Russia's largest oil producer, Rosneft, said USA oil producers could add up to 1.5 million bpd to world oil output next year.
That was the 20th straight weekly rise, a stretch spanning roughly five months, pointing to further gains in oil production later in the year.
Crude oil prices were mixed in part because of trading contracts.
USA crude production has also continued to increase, rising to 9.34 million bbl/d, up almost 500,000 bbl/d from a year-ago.
Russian Deputy Prime Minister Arkady Dvorkovich said on Friday he did not think that the global output cut agreement would be altered should prices go lower.
Still, higher seasonal demand in the second half of 2017 could result in a significant drawdown in inventories that would move the market closer to balance, analysts said.
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