Oil prices have been on the rise in the last few days as hedge funds and other money managers rushed to amass more bullish bets on data that USA shale oil production growth is slowing, brighter economic forecasts, and the possibility that OPEC will extend its production cuts into the second half of the year.
Oil ignores the bearish API inventory report released yesterday and hit five-month highs a few minutes before press time.
The price of U.S. crude oil is looking increasingly positive, while Brent crude seems to be heading up to the $70 per barrel mark.
However, in a choppy session on Wednesday, so far, the price of a barrel of West Texas Intermediate crude has started to slide and has dropped by nearly a buck, travelling from $62.96 to a low of $62.07.
Supply from OPEC countries hit a four-year low in March, a Reuters survey found this week.
US West Texas Intermediate (WTI) futures rose 28 cents, or 0.5 per cent to $61.87 a barrel.
Crude oil prices fell today after the Energy Information Administration reported an inventory increase of 7.2 million barrels for the week to March 29.More news: Gundogan confident Man City can pull off the quadruple
OPEC and its allies will probably extend their output cuts of 1.2 million barrels a day into the second half, but compliance could be significantly lower, DNB Markets analyst Helge Andre Martinsen said in an interview in Houston.
The EIA also reported an increase in gasoline production, averaging 9.8 million barrels per day.
The threat of additional US sanctions is hanging over Iranian supply, while the White House is set to decide by early May if waivers allowing some countries to keep buying oil from the Persian Gulf nation will be extended or not.
"Crude imports rose and crude exports fell, which translates into considerably higher net imports".
Oil's pattern on the price charts could lead to further gains.
Despite Russia curbing its oil production by 225,000 barrels per day (bpd) from its production levels in October, the Caspian region country still missed the target set under the deal reached with OPEC.
On the demand side, Chinese factory activity unexpectedly rose last month, at the fastest clip in eight months, providing another support to oil prices with signs that oil demand growth could hold resilient going forward.