Oil prices rebounded in Wednesday's session on expectations that U.S. crude inventories have dropped and on signs that the world's top oil exporters will stick to agreed output cuts that took effect this week.
Industry group the American Petroleum Institute reported preliminary data that showed inventories fell by 7.4 million barrels last week, more than analysts expected.
Weekly U.S. industry and government reports were expected to show a 1.7 million-barrel crude draw for last week, analysts polled by Reuters said. Both data sets come late this week due to the New Year's holiday.
U.S. West Texas Intermediate crude futures settled up 93 cents, or 1.8 percent, at $53.26 per barrel.
Global benchmark Brent crude futures rose $1.02, or 1.8 percent, at $56.49 a barrel by 5:43 p.m. ET (2243 GMT). The contract reached an 18-month high in the previous session, but a strong dollar has shaved off most of those gains.
Oil companies likely drew down inventories in the final week of the year for tax-related reasons, which could lead prices to spike after inventory data is released.
Both benchmarks recovered some losses from the previous day — when the U.S.-dollar hit a 14-year peak and knocked oil from 18-month highs — as the greenback dipped on Wednesday, making dollar-denominated fuel purchases in other currencies cheaper.
OPEC member Kuwait also lifted expectations that producers will comply with a deal to reduce oversupply after its state-owned oil producer said on Wednesday it would cut output in the first quarter.
Members of the Organization of the Petroleum Exporting Countries in November agreed their first output cut since 2008 in an attempt to stabilize oil prices.
As part of the deal, Kuwait has to reduce output by 131,000 barrels per day.
An OPEC committee meeting to monitor compliance with the agreement is scheduled for Jan. 21-22 in Vienna.
"Prices are likely to remain volatile until there is evidence that quotas are being adhered to," analysts at Cenkos Securities wrote.
Also reflecting a tightening market, traders expect top oil exporter Saudi Arabia to raise the official selling price for its crude to Asia in February.