Oil prices were higher on Tuesday, as the dollar relinquished early gains and expectations of OPEC output curbs lifted crude futures from session lows despite forecasts for a second straight weekly build in U.S. crude stockpiles.
U.S. crude inventories likely rose by 2.4 million barrels in the week to Oct. 14, a Reuters poll of oil market analysts found. In the previous week to Oct 7, stocks grew by 4.9 million barrels.
The American Petroleum Institute (API), an industry group, will issue its report on domestic oil stocks at 4:30 p.m. EDT (2030 GMT), after Tuesday's market settlement. The U.S. Energy Information Administration (EIA) will issue official numbers on Wednesday.
Brent crude rose 19 cents to $51.71 a barrel by 2:38 p.m. ET (1838 GMT), down from a session peak of $52.09. U.S. West Texas Intermediate (WTI) crude settled up 35 cents at $50.29, after earlier climbing to $50.53.
The dollar was mixed in choppy trading. A strong dollar makes crude and other commodities denominated in the greenback less affordable to holders of other currencies.
Oil prices are up 13 percent from three weeks ago after the Organization of the Petroleum Exporting Countries proposed its first output cut or freeze in eight years to rein in a global crude glut when it gathers on Nov. 30 for its policy meeting.
The oil rally has, however, stalled at around $50 a barrel on doubts whether OPEC will reach a deal that will satisfy all its 14 members. Most in the Saudi-led cartel need higher prices to repair damage done to their economies after crude fell to almost $26 a barrel this year from 2014 highs above $100.
"There is definite willingness and desire on behalf of most countries to see prices go higher," Ian Taylor, chief executive at Vitol, the world's top oil trader, said at an industry conference in London. "Expectations are that we will get something; whether it is quite good enough to get a substantial rebalancing in the short term, I am not sure."
But some, like Iran, prefer not to cut output. Contributing to OPEC's output has been Iran's rising exports — its October crude exports are set to hold near five-year highs at about 2.56 million bpd, a source with knowledge of its preliminary tanker schedule said.
Saudi crude exports in August fell to 7.305 million barrels per day from 7.622 million bpd in July, data showed on Tuesday.
Some remain positive in their supply-demand outlook for oil.
Analysts at Bernstein Energy said global oil inventories rose by just 17 million barrels to 5.618 billion barrels in the third quarter, the smallest build since the fourth quarter of 2015.
Citi Bank, meanwhile, pointed to an overall drop in inventories from the United States, Japan, Singapore and Europe of 35.9 million barrels.
The lower stocks, seasonal OPEC output falls irrespective of any deal and high demand for heating fuels during the Northern Hemisphere winter combine to suggest that the market will be balanced at the end of this year, analysts at Wood Mackenzie have forecast.
Traders are taking note, with money managers raising their bullish bets on U.S. crude prices to the highest level since the slump started in 2014.
JBC Energy, meanwhile, said that October tanker fixtures from the Gulf have reached a five-year high, possibly reflecting concerns that effective action by OPEC group could spur further price increases later in the fourth quarter and that additional storage buying might be best covered before November.
Others said oil prices could not sustain the constant rise of recent weeks on OPEC pledges.
"We shorted WTI this morning at $51," said Phil Davis, trader at PSW Investments in Woodland Park, New Jersey. "We think ultimately that over the course of the next 30 days or so, it will drop down to $37.50 or possibly lower."