Oil prices rose to new 8-week highs on Thursday, buoyed by hopes that a steeper-than-expected decline in U.S. crude oil inventories will reduce global oversupply.
U.S. West Texas Intermediate futures ended Thursday's session up 29 cents to $49.04 a barrel. They are up 4.8 percent on the week.
Brent crude futures were up 56 cents, or 1.1 percent, at $51.53 a barrel by 2:34 p.m. ET (1834 GMT), after rising about 1.5 percent in the previous session.
U.S. crude stocks fell sharply last week as refineries increased output and imports declined, while gasoline stocks decreased and distillate inventories fell, the Energy Information Administration said on Wednesday.
The 7.2 million barrel decline in crude inventories in the week ending July 21 was well above the 2.6 million barrel forecast.
"This marks the fourth consecutive week that total hydrocarbon inventories have fallen during a time of year when they normally increase," said PIRA Energy oil analyst Jenna Delaney.
Still, some analysts say the market needs to see further signs of rebalancing.
"As encouraging as this may seem, the price recovery won't begin in earnest until evidence of U.S. oil rebalancing is mirrored on a global scale," Stephen Brennock at oil brokerage PVM said referring to the drawdown in oil stocks.
Expectations that the long-oversupplied market is moving towards balance were also supported by this week's news that Saudi Arabia plans to limit crude exports to 6.6 million barrels per day (bpd) in August, about 1 million bpd below the level last year.
Kuwait and United Arab Emirates, fellow members of the Organization of the Petroleum Exporting Countries, have also promised export cuts.
U.S. shale producers including Hess Corp, Anadarko Petroleum and Whiting Petroleum this week announced plans to cut spending this year as a result of low oil prices.
But analysts say oil prices may have little room to head higher as recent gains could encourage more output, particularly from U.S. shale producers with low costs.
"The market will likely be paying even more attention to drilling activity in the U.S. in the coming weeks, particularly after suggestions from certain industry players that the rig count in the U.S. is slowing," ING said in a research note on Wednesday.
Brennock warned that a slowdown in shale drilling may prove temporary.
"Recent evidence of a slowdown in US upstream activity has been exaggerated and will if anything be transitory," he said.
"Instead, a strong finish to the year is on the cards with the advent of $50 a barrel safeguarding the rebound in U.S. tight oil supply," he added.
U.S. fuel exports are on track to hit another record in 2017, making foreign fuel markets increasingly important for the future growth prospects and profit margins of U.S. refiners.
In a sign Europe's major energy firms are turning a corner after a three-year slump, Royal Dutch Shell, France's Total and Norway's Statoil reported sharp increases in cash flow from operations in the second quarter.
Profits for the three companies beat analyst expectations, meaning they can all comfortably pay dividends and reduce debt.