Oil prices jumped for a third day on Thursday to their highest in three weeks after Kuwait gave its backing for an extension of OPEC production cuts in an attempt to reduce global oversupply.
Kuwait oil minister Essam al-Marzouq said his country was among several nations supporting the extension of a deal between the Organization of the Petroleum Exporting Countries and other exporters to limit output, state news agency KUNA reported.
The rebound has renewed some optimism after a period of three weeks where speculators aggressively reduced long positions following weeks of higher-than-expected inventory figures. Both Brent and U.S. crude reached their highest levels since March 9 on Thursday.
U.S. crude oil settled 84 cents, or 1.7 percent, higher at $50.35, it's best closing level in three weeks.
Brent crude oil was up 53 cents, or 1 percent, at $52.95 a barrel by 2:36 p.m. ET (1836 GMT) , after hitting a session high of $53.10.
"There is a significant chance that a short-to-medium-term bottom has been found," said Tamas Varga, analyst at London brokerage PVM Oil Associates.
The Organization of the Petroleum Exporting Countries has agreed to reduce its oil production by 1.2 million bpd during the first six months of 2017 and so far most OPEC members appear to be sticking to the deal.
OPEC agreed to reduce oil production by 1.2 million barrels per day during the first six months. Output has fallen for a third straight month and members have complied with 95 percent of their commitments.
"I see no sign from OPEC and Saudi Arabia that they will not roll over the cut into the second half of the year ... the market is about to go from supply surplus to deficit on crude " said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina.
Other oil exporters outside OPEC, including Russia, have also gradually reined in production.
Russia has reduced its output by 200,000 bpd in March in accordance with the agreement, the ministry quoted Energy Minister Alexander Novak as saying in a TV interview. Russia has promised to cut output by 300,000 bpd.
"It is highly unlikely Russia will achieve an absolute 300,000 bpd reduction during the tenure of the current agreement," Eurasia Group said in a research report.
Libya said production dropped by about a third or 250,000 bpd earlier this week due to armed protesters blocking western oilfields of Sharara and Wafa.
Fears of oversupply still hang over the market as OPEC grapples to tighten the oil market because inventories in many parts of the world are at, or near record highs and as U.S. production rises.
U.S. crude stocks rose 867,000 barrels to a record of nearly 534 million barrels last week, the Energy Information Administration (EIA) said on Wednesday.
The start-up of a 500,000 bpd crude pipeline in North Dakota next month, despite opposition by environmental groups and Native Americans, is expected to hasten a revival in output from the Bakken region which fell sharply along with global oil prices during the past two years.
Correction: This story was updated to state that U.S. crude oil closed at $50.35.