NEW YORK (Reuters) - Oil prices on Tuesday rose to a near one-month high, supported by an unplanned production outage in the North Sea and expectations of a drawdown in U.S. crude and product inventories.
Brent LCOc1 futures rose $1.05, or 2 percent to settle at $54.17 a barrel. The move higher came after the global benchmark broke above its 100-day moving average, a key resistance level, putting the contract into technically overbought territory for the first time since the end of December.
U.S. West Texas Intermediate crude CLc1, meanwhile, gained 79 cents, or 1.6 percent, to settle at $51.03 per barrel.
Both contracts ended the day at their highest levels since March 7. They hit four-month lows late last month but have recovered 9 percent since then on expectations the Organization of the Petroleum Exporting Countries (OPEC) and other producers would cut output under an agreement reached last year.
"OPEC compliance is still holding better than we expected with next week's release of various monthly agency reports likely to confirm," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
In the North Sea, production of crude oil from Britain's 180,000 barrel per day Buzzard field was temporarily halted while repair work is carried out at an onshore processing terminal, trading sources said, noting normal output should be restored in the coming day or two.
Meanwhile, U.S. crude stocks fell by more than expected last week, dropping by 1.8 million barrels compared with analysts' expectations of a 435,000 barrel decline, according to data released late Tuesday from the American Petroleum Institute. [API/S]
The U.S. Energy Information Administration will issue its inventory figures on Wednesday at 10:30 a.m. EDT.
"U.S. product stocks need to be watched closely, since they have fallen massively over the last few weeks," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.
Yet global inventories remain high. UBS analyst Giovanni Staunovo said OPEC was taking longer than expected to tighten the oil market but recent data suggested the process was now well under way.
"We believe the implemented production cuts will trigger a material drawdown in OECD oil inventories and thus higher crude oil prices," Staunovo said, referring to the Organization for Economic Co-operation and Development.
"We expect Brent oil prices to rise above $60 a barrel in three months," Staunovo said.
Additional reporting by Christopher Johnson in London and Jane Chung in Seoul; Editing by Marguerita Choy; Editing by David Gregorio and Andrew Hay