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US crude posts best monthly gain since April 2016, settling at $50.17 and rising 9% in July

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters

Oil futures closed at more than two-month highs on Monday afternoon, as news of a producers' meeting next week added to bullish sentiment driven by the threat of U.S. sanctions against OPEC-member Venezuela.

U.S. West Texas Intermediate (WTI) futures ended Monday's session up 46 cents, or nearly 1 percent, at $50.17 a barrel, it's best settle since May 24. The contract was up nearly 9 percent in July, the strongest monthly gain for WTI since April 2016.

Brent crude futures pared earlier losses to trade up 1 cent at $52.54 a barrel by 2:17 p.m. ET (1817 GMT).

U.S. crude had jumped above $50 a barrel for the first time in two months early in the session, after U.S. officials said sanctions on Venezuela could be announced as early as Monday.

The United States is considering imposing sanctions on the country's oil sector in response to Sunday's election of a constitutional super-body, which Washington has denounced as a "sham" vote.

Venezuela election: 'Maduro will survive'

Even though the White House has said that "all options are on the table," the most likely action, banning Venezuela from importing U.S. oil, could come as early as Monday.

A Reuters survey on Monday indicated output from OPEC members rose, mostly from adjustments upward to Iraqi and Saudi output.

"The upward revision by 200,000 in June for OPEC-13 is quite shocking," said Commerzbank senior oil analyst Carsten Fritsch, "Compliance already slipped sharply in June to 77% (initially reported at 92%)."

However some OPEC and non-OPEC members will meet on Aug. 7-8 in Abu Dhabi to assess how the group can increase compliance with production cuts that began on Jan. 1.

Hedge funds and money managers have raised bullish bets on U.S. crude oil to their highest in three months, U.S. data showed.

In Europe, a production outage at Shell's 404,000 barrel-per-day Pernis refinery in the Netherlands following a fire sent benchmark European diesel margins, which reflect the profit made from refining crude oil into the road fuel, to their highest since November 2015 at $14.60 per barrel.

Venezuela could become first oil state to 'fully fail,' analyst warns

Hedge funds and money managers have raised bullish bets on U.S. crude oil to roughly three months, data showed.

U.S. production has hampered efforts to rebalance the market but signs the market is tightening have emerged.

"Strong increases in the price of oil ... (were) fueled in large part by the substantial drawdowns in U.S. inventories over the past several weeks," said William O'Loughlin, analyst at Rivkin Securities.

U.S. crude inventories have fallen by 10 percent from their March peaks to 483.4 million barrels.

Drilling for new U.S. production is also slowing, with just 10 rigs added in July, the fewest since May 2016.

— CNBC's Tom DiChristopher contributed to this story.