Oil prices rose on Tuesday as investors anticipated a weekly drawdown in U.S. crude inventories that they hoped would boost prices closer to $50 a barrel.
"We're gearing up on expectations that the wildfires in Canada may finally be showing up in U.S. crude inventory numbers," said Phil Flynn, analyst at the Price Futures Group in Chicago. "If they show up decisively, it may be what the market needs to test $50."
Commercial crude stocks in the United States likely fell by around 2.5 million barrels to 538.8 million in the week ended May 20, a Reuters poll showed.
The American Petroleum Institute (API), a trade group, will issue its own data on U.S. crude stockpiles at 4:30 p.m. EDT (2030 GMT), ahead of official numbers from the U.S. government on Wednesday morning.
Oil also got a lift as U.S. stocks rose to their highest in the last seven sessions, helped by gains in technology and financial stocks. Crude buyers seemed unfazed by a stronger dollar, which typically makes greenback-denominated oil costlier in other currencies.
Brent futures were up 39 cents to $48.74 a barrel by 1:15 p.m. ET (1715 GMT). U.S. crude futures rose 59 cents to $48.67 a barrel.
Oil was also supported by an Iraqi official's remarks that maintenance issues and power outages have caused the OPEC member's output to fall to 4.5 million barrels per day from January's record high of 4.78 million bpd.
Consultant IHS added to the bullish theme, saying just 2.8 billion barrels of oil were discovered outside North America in 2015, the lowest since 1952, following a sharp fall in exploration and appraisal drilling.
"As spare capacity dwindles, the threat of a price spike increases," said Matt Smith, who tracks crude cargoes for New York-based Clipperdata. "Non-OPEC production should continue to fall through the duration of the year, gradually erasing the supply overhang and further tightening up crude fundamentals."
A meeting of the OPEC exporter group, including Iran, is scheduled for June 2.
Plans for a deal between OPEC and non-OPEC producers to shore up crude prices by freezing output fell apart in April when Saudi Arabia demanded that Iran, its main rival for influence in the region, participate.
A strike in France limited the market's gains by denting crude demand in Europe as refineries were disrupted by pickets.
French police using water cannon and tear gas broke up a strike picket that was blocking access to a large oil refinery in the southern port area of Marseille in a government-versus-union showdown over labour law reforms.
Sommer at Axpo Trading added that gains were likely to be short-lived, and that prices were likely to fall again in the coming weeks.
"There's an ongoing trend of increasing supply. Supply from unplanned outages in Nigeria and Canada are likely to come back," he said, referring to disruption caused in the two countries by protests and wildfires.