USA crude rose 0.4% to $46.75 per barrel.
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Brent crude hit a six-week high above US$50 a barrel overnight, as the world’s biggest producers discussed a possible freeze in production levels.
The global benchmark crude traded at $US1.94 over WTI for October delivery, after reaching the widest premium since December.
Technically, oil had been in a bear market early this month, but the rally turned it into a bull market by mid August.
The climbing of Brent crude to a 6-week high above the psychological barrier of $50 a barrel was linked to a report that showed US oil stockpile decreased last week.
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“The only way for Saudi Arabia to maintain oil exports and avoid loss of market share in the summer is to increase production”, said Anas Alhajji, an independent oil analyst based in Houston.
Saudi Arabia told the Organization of Petroleum Exporting Countries last week that its production rose further in July, reaching an all-time high of 10.67 million barrels a day.
USA crude oil imports averaged 8.2 million barrels per day last week, down by 211,000 barrels per day from the previous week.
“Oil prices continue the upward trend on upcoming freeze-deal talks”, said Michael Poulsen, an analyst at Global Risk Management Ltd.
The dollar rose against a basket of currencies, making greenback-denominated oil more expensive to holders of other currencies.
State oil firm Saudi Aramco has stakes in more than 5 million bpd of refining capacity at home and overseas, placing it among the global leaders in making oil products.
A supply glut coupled with lack of demand has weighed on oil prices in recent months.
OPEC will next month hold an informal meeting in Algerian capital Algiers, and this has stoked speculation that the group plus Russian Federation will strike a deal to freeze production having failed to reach a deal back in April. San Francisco Fed President John Williams said Monday the Fed should consider setting higher inflation targets. The markets briefly extended gains after the U.S. Energy Information Administration (EIA) said domestic crude inventories fell 2.5 million barrels last week, surprising analysts who had expected a build of 522,000 barrels.
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Exxon Mobil Corp., Chevron Corp. and Hess Corp. have agreed to bid together for rights to drill for crude in Mexico’s deepwater oil areas, according to a person with direct knowledge of the plans.
