Oil prices extend gains; Brent rises to highest since May

Oil prices continued higher on Thursday, as data showing a sixth consecutive week of declines in U.S. crude inventories added to optimism that the market was rebalancing.

The U.S. West Texas Intermediate crude September contract was at $49.80 a barrel by 3:35AM ET (0735GMT), up 24 cents, or around 0.5%.

Elsewhere, Brent oil for October delivery on the ICE Futures Exchange in London tacked on 32 cents, or about 0.6%, to $53.02 a barrel. It touched its highest since May 25 at $53.14 earlier in the session.

Oil futures finished higher on Wednesday after U.S. government data showed a sharp decline in crude inventory.

U.S. oil inventories fell by 6.5 million barrels at the end of last week to 474.4 million barrels, much more than the expected drop of around 2.7 million barrels.

However, the report also showed that gasoline inventories rose by 3.4 million barrels, disappointing expectations for a decline of 1.4 million barrels. For distillate inventories including diesel, the EIA reported a fall of 1.7 million barrels.

Meanwhile, market players awaited monthly reports from the Organization of Petroleum Exporting Counties and the International Energy Agency to assess global oil supply and demand levels.

OPEC will publish its monthly assessment of oil markets at around 7:00AM ET (1100GMT) on Thursday. It includes figures on the state of global crude stockpiles for July.

On Friday, the International Energy Agency will release its own monthly report on global oil supply and demand.

The data will give traders a better picture of whether a global rebalancing is taking place in the oil market.

OPEC and 10 producers outside the cartel, including Russia, agreed since the start of the year to slash 1.8 million barrels per day in supply until March 2018 in order to reduce a global supply glut and rebalance the market.

However, so far, the deal has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, as well as a relentless increase in U.S. shale output.

Elsewhere on Nymex, gasoline futures for September was little changed at $1.624 a gallon, while September heating oil ticked up less than half a cent to $1.656 a gallon.

Natural gas futures for September delivery shed 0.6 cents to $2.877 per million British thermal units as traders looked ahead to weekly storage data due later in the global day.