Oil prices rose on Wednesday, boosted by signs of strong U.S. demand for distillate products and tightening global crude supply.
But gains were capped by a rising U.S. dollar and ongoing concerns about a global economic slowdown.
U.S. West Texas Intermediate crude futures settled 35 cents higher at $54.01 a barrel on Wednesday, after posting a session low of $52.86.
Benchmark Brent crude futures rose 64 cents, or 1 percent, to $62.62 a barrel around 2:25 p.m. EST. The benchmark earlier fell to a session low of $61.05 a barrel.
U.S. government data on Wednesday showed that domestic crude inventories rose by less than expected last week even as refineries hiked output. Stocks gained by 1.3 million barrels in the week ended Feb. 1, compared with analysts' expectations for an increase of 2.2 million barrels.
Gasoline stocks increased by 513,000 barrels, less than anticipated, while distillate stockpiles posted a larger-than-expected drop by 2.3 million barrels.
"Basically it's a pretty supportive report," said Phil Flynn, oil analyst at Price Futures Group in Chicago. "That drop in distillates is probably enough to give the entire report a more bullish tilt.
Market participants have already been focused on signs of tightening global crude supply after OPEC and allies began an agreement in January to cut output.
The producers known as OPEC+ started cutting production by 1.2 million barrels per day from last month to avert a new supply glut, and OPEC has delivered almost three quarters of its pledged cuts already, a Reuters survey showed last week.