Oil prices on Tuesday rose to a near one-month high as expectations of a drawdown in U.S. crude and product inventories outweighed news of higher Libyan production.
Brent futures were up 91 cents, or 1.7 percent, at $54.03 a barrel by 11:27 a.m. EDT (1527 GMT). That pushed the global benchmark over its 100-day moving average, into overbought territory for the first time since the end of December.
crude oil was up 70 cents, or 1.4 percent, at $50.94 per barrel.
Both contracts were at their highest since March 8. They hit four-month lows late last month but have recovered 8 percent since then on expectations the Organization of the Petroleum Exporting Countries (OPEC) and other producers would cut output under an agreement reached last year.
"OPEC compliance is still holding better than we expected with next week's release of various monthly agency reports likely to confirm," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
Demand is picking up in key markets, including the United States, the world's biggest oil consumer. Analysts forecast that data will show U.S. crude stocks declined last week after rising for two consecutive weeks. A decline in refined product inventories was also expected, a survey showed.
The American Petroleum Institute will report inventory data at 4:30 p.m. EDT (2030 GMT) on Tuesday, while the U.S. Energy Information Administration will announce official figures on Wednesday at 10:30 a.m. EDT.
"U.S. product stocks need to be watched closely, since they have fallen massively over the last few weeks in Frankfurt.
Yet global inventories remain high. UBS analyst Giovanni Staunovo said OPEC was taking longer than expected to tighten the oil market but recent data suggested the process was now well under way.
"We believe the implemented production cuts will trigger a material drawdown in OECD oil inventories and thus higher crude oil prices," Staunovo said, referring to the Organisation for Economic Co-operation and Development.
"We expect Brent oil prices to rise above $60 a barrel in three months," Staunovo said.
U.S. light crude may drop to $49.62 a barrel as it failed to break resistance at $50.95. Brent crude may retrace back to $52.79 per barrel, he said.
Libya's crude output increased after state-owned National Oil Corp lifted a force majeure on loadings of Sharara oil from the Zawiya terminal, sources told Reuters.
