Oil prices dipped on Thursday in choppy U.S. trading, as nagging worries about abundant global crude supplies dragged prices lower after an early rally pushed Brent above $50 per barrel for the first time since early June.
Traders predicted prices would hold near current levels ahead of Monday's meeting between key OPEC and non-OPEC producers in St. Petersburg, Russia.
Brent crude futures, the international benchmark for oil prices, were down 39 cents $49.31 per barrel by 2:34 p.m. ET (1834 GMT). U.S. West Texas Intermediate (WTI) crude futures ended Thursday's trade 33 cents lower at $46.79 per barrel.
Oil futures also fell in tandem with other risk markets mid-morning after Bloomberg reported that Robert Mueller, special counsel appointed to investigate allegations of Russian interference in the 2016 election and possible ties with U.S. President Donald Trump's administration, was also looking into Trump's business transactions.
Stock markets and the dollar dropped on that news before recovering somewhat.
In early trade, both benchmarks rose to their highest since June 7, after rallying in the previous session on data showing U.S. crude and fuel inventories fell sharply last week.
U.S. crude inventories dropped by 4.7 million barrels in the week to July 14, according to the Energy Information Administration, more than forecast. Gasoline stocks fell by 4.7 million barrels, exceeding expectations, while distillate stocks also fell.
"We've had quite a bit of a rally in gasoline over the last couple of weeks," said Andy Lipow, president of Lipow Oil Associates. "You might be getting a little bit of profit taking in that."
U.S. oil stock levels, at roughly 490 million barrels, remain well above the five-year average, while U.S. production has increased by almost 12 percent since mid-2016 to 9.4 million barrels per day (bpd).
Analyst remain concerned about high supplies from the Organization of the Petroleum Exporting Countries (OPEC), despite pledged to cut output along with non-OPEC producers.
The market has been watching reports that Saudi Arabia, the world's largest crude producer, is considering an additional supply cut to bring markets into balance.
The Financial Times reported Wednesday that the Saudis were considering additional export cuts, citing a consultant's report. On Tuesday, Reuters reported the country was committed to working with other countries to draw down stocks, taking into account the surprising increase in production from OPEC members Nigeria and Libya.
The Organization of the Petroleum Exporting Countries and non-OPEC allies, including Russia, agreed last year to cut production by 1.8 million bpd a day; that deal has been extended to March 2018.
Output from OPEC members Libya and Nigeria, which were exempt from OPEC-led cuts regime, has added to the surplus.
A lack of compliance by some and the two exemptions have undermined the rebalancing effort, capping prices.
But analysts said rising political risk, including potential U.S. sanctions on Venezuela and tensions in the Middle East and North Africa, could provide some support to oil prices.
"We don't expect to see this quietness to last forever, as geopolitical risks are rising again," ANZ bank said in a note.
— CNBC's Tom DiChristopher contributed to this story.