U.S. West Texas Intermediate futures were at $48.03 a barrel, up 37 cents.
Crude production last week edged lower, with total output down 24,000 barrels a day to 9.318 million barrels, the EIA data yesterday showed.However, in a monthly report issued Tuesday, the EIA said it expects United States crude production in 2018 to average ten million barrels a day, exceeding the previous annual record of 9.6 million barrels a day in 1970.
World fuel production and consumption is roughly in balance, at nearly 98 million bpd, although inventories remain somewhat bloated, according to the U.S. Energy Information Administration (EIA).
The headline inventory draw in the American Petroleum Institute (API) data was higher than expected at 4.6 million barrels for the latest week following an 8.7 million decline the previous week and there was a further significant decline in Cushing inventories. WTI is now trading at $48.1 per barrel and Brent at $2.3 per barrel premium to WTI.
The faster than expected increase in gasoline inventories surprised investors, as the summer months are traditionally associated with the start of the USA summer driving season, which usually spurs heavier refining activity. USA light crude prices were at $46.12 US per barrel, downward $2.07 cents, or 4.3%.
August Brent crude LCOQ7, -0.49% on London's ICE Futures exchange fell 16 cents, or 0.3%, to $$49.31 a barrel.
Despite this, there are doubts that an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to curb production by nearly 1.8 million bpd was seriously denting actual exports.
Although Qatar is a relatively small oil producer, other OPEC states could see such an action as a reason to stop restraining their own output, traders said.
Crude prices gained before slipping on Monday on the news Saudi Arabia, Egypt, Bahrain, the United Arab Emirates, and Yemen have severed diplomatic ties with Qatar, accusing the country of supporting terrorism.
Members of the Organization of Petroleum Exporting Countries and other producers, like Russian Federation, agreed in January to sideline the equivalent of 2 percent of global oil demand in an effort to balance a market favoring the supply side.
"The market is still awash in oil, and it's waiting to see more concrete signs of global oil inventories declining", said Andy Lipow, an oil market analyst in Houston.