Oil futures rose on Thursday after official figures showing U.S. crude inventories fell more than expected, but the market is clearly settling into a range amid quiet trading, analysts said.
Brent crude, the global benchmark, was up 18 cents, or 0.3 percent, at $52.88 at around 0617 GMT, after falling slightly earlier. It closed up 1.1 percent on Wednesday, snapping two days of declines.
U.S. West Texas Intermediate (WTI) crude was up 16 cents, or 0.3 percent, at $49.72, after declining earlier. The contract gained 0.8 percent in the previous session. "Broadly I think the market is trading sideways at the moment," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
U.S. crude stockpiles fell last week as refineries boosted output to the highest percentage of capacity in 12 years, the Energy Information Administration said on Wednesday. U.S. oil inventories dropped by 6.5 million barrels last week, the government data showed, steeper than the expected decrease of 2.7 million barrels.
"It does create the hope that we are going to end the summer driving season with inventories below the year before, which would be a positive development," Spooner said. Refiners processed nearly 17.6 million barrels of crude, surpassing a record set in May and the most for any week since the U.S. Department of Energy started keeping data in 1982.
But a surprise increase in gasoline stocks is capping gains in oil prices and tempering attempts by the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers to boost prices that are about half of levels three years ago. "All the crude that was drawn was basically run through the refineries and this resulted in a gasoline build of 3.4 million barrels," said Matt Stanley, a commodities broker at Freight Investor Services in Dubai.
"The minute OPEC try and raise prices by cutting production the U.S. producers will react accordingly to fill the void. This results in a tug of war that we have witnessed all year and the final outcome is a rangebound market," he added.
They are cutting output by about 1.8 million barrels per day (bpd) under an agreement set to run until March 2018. The deal has supported prices but a recovery in output in Libya and Nigeria, OPEC members exempt from the cut, has also complicated the initiative.