USA light crude oil was $1.28, or 2.8% higher at $47.16 US a barrel.

The Saudi oil giant made a decision to cut oil supplies to the Asian market in June by around 7 million barrels, a source told Reuters, as part of a wider OPEC agreement to help buoy prices.

United States inventories fell by 5.2 million barrels last week to 522.5 million, the Energy Information Administration (EIA) reported, the sharpest fall since December.

Oil prices sank to a five-month low below $44 a barrel in NY last week on concern that the cuts by OPEC and 11 partners, including Russian Federation, aren't clearing the glut and that more supply is coming from US shale drillers.

According to the U.S. Energy Information Administration, crude inventories fell 5.2 million barrels last week, much more than the 1.8 million-barrel drop analysts had predicted.

It has since recovered to more than $50 and headed close to $60, helped by a decision by oil-producing nations at the end of past year to curb production.

Despite the stronger trend, analysts said the market remained under pressure after a build in gasoline stocks in the USA which partially offset the fall in crude inventories.

Further, the EIA upgraded its crude oil estimate to an average of 9.3 million barrels per day (bpd) in 2017 and 10 million bpd in 2018.

Global benchmark Brent crude was up $1.81 at $50.54 a barrel by 1:51 p.m.

Gasoline demand rose to the highest since late March to over 9.2 million barrels a day, but still down 2.4% from the same period previous year, according to the data.

So the iPath S&P GSCI Crude Oil Total Return Index ETN (OIL), climbed 0.8%, extending yesterday's almost 4% surge, and the U.S. Oil Fund (USO) rose 0.9% to $9.94.

The EIA raised its USA oil production forecast to an average of 9.3 million barrels per a day (bpd) in 2017 and 10 million bpd in 2018 while it lowered its projection for average oil prices in 2017 to $52.60 a barrel for Brent and $50.68 for WTI.

WTI has been under pressure for the last several weeks.

"However, continued rebalancing in the oil market by year-end will require the collective efforts of all oil producers to increase market stability, not only for the benefit of the individual countries, but also for the general prosperity of the world economy", analysts at the Vienna based headquarters said.

Meanwhile, the benefits of OPEC's agreement to cut output have proved elusive.


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