U.S. crude for September delivery settled 81 cents higher at $48.79 a barrel Wednesday after rallying as much as 2.5 percent from six-month lows earlier in the session.
Crude oil futures closed in on $50 following a bullish inventory report from the Department of Energy and after Dow Jones reported that Saudi Arabia would be pulling back oil production after the summer.
Futures briefly jumped after the Federal Reserve announced Wednesday afternoon it would continue to hold interest rates near zero, but oil prices soon gave back those gains and more.
Crude futures have lost more than $10 a barrel since early June on fears that peak summer demand for gasoline in the United States was not enough to offset a growing global glut in oil supply. A resurgent dollar's impact on commodities and a stock market tumble in No.1 energy consumer China also contributed to the decline.
However, the latest data from the U.S. Energy Information Administration showed a 4.2 million-barrel draw in crude stockpiles last week, more than 20 times analysts' expectations for a decrease of 184,000 barrels. That indicated demand for energy may have been stronger than some thought.
The draw diverged sharply from the prior week's inventory build, which drove stockpiles above a five-year seasonal average.