Oil prices rose on Thursday in a volatile session on growing signs that key oil producers will adhere to production cuts at next week's OPEC meeting amidst a persistent global glut.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia pledged to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2016, a deal likely to be extended until the end of March 2018.
Leaders from OPEC and other producers meet in Vienna on May 25 to decide on output policy. The group is expected to prolong its agreement to limit production for up to nine months.
Russia's largest oil producer Rosneft will meet its agreements with OPEC on oil output reductions, Igor Sechin, Rosneft chief executive, told reporters in Berlin on Thursday.
Both benchmarks rose on Wednesday after news of a drawdown in U.S. crude inventories and a dip in U.S. output. The U.S. Energy Information Administration said inventories fell 1.8 million barrels in the week to May 12 to 520.8 million barrels.
But the U.S. crude drawdown was smaller than expected and the oil market remained extremely well supplied, analysts said.
"Crude stocks are still higher than last year's stock levels ... There is a long way to go before we arrive at five-year average stock levels," said Sukrit Vijayakar, director of Trifecta energy consultancy.
In addition to U.S. crude stocks drawing down for the sixth consecutive week, the EIA showed an increase in refining rates.
But Michael Dei-Michei, head of research at JBC Energy in Vienna, said the market should consider that intermediate products — gas oils, diesel oil and other products — are not featured in the headline EIA numbers, and those stocks are rising, which could lead to higher finished product inventories. That could slow the supply drawdown.
The effects of higher production could become a lot more visible in the next few weeks, he said.
A surplus of U.S. supply has led to large volumes of crude being exported from the United States to northern Asia, undermining the OPEC-led efforts to tighten the market.
Shipping data in Thomson Reuters Eikon shows that U.S. crude exports to Asia have soared from a handful of tankers a quarter throughout 2015 and 2016 to 10 tankers in the first quarter of 2017 and that figure is expected to rise.
North Sea oil shipments to Asia have also been at record highs this year, with 19 tankers delivering in the first quarter and a similar amount expected to go to Asia in the second.
Oil prices fell more than 1 percent earlier, as investors became increasingly cautious following the latest reports of links between Russia and the campaign to elect Donald Trump president.
Traders said news that advisers to the president's campaign last year had at least 18 undisclosed contacts with Russians had unsettled investors. Crude futures turned sharply lower after Reuters reported the news.
"Sentiment is fragile so it does not take much to rock the boat even further," said Ole Hansen, head of commodity strategy at Denmark's Saxo Bank. "This is a general risk-off move."
— CNBC's Tom DiChristopher contributed to this report.