Investing.com - Crude oil futures edged higher on Thursday, amid indications that Saudi Arabia could cut production at the end of the summer and following a larger than expected drawdown in U.S. supplies last week.
On the ICE Futures Exchange in London, Brent oil for September delivery tacked on 37 cents, or 0.69%, to trade at $53.75 a barrel during European morning hours.
A day earlier, London-traded Brent futures fell to $52.51 before erasing losses to end at $53.38, up 8 cents, or 0.15%.
The Wall Street Journal reported that Saudi Arabia could slash crude output by 200,000 to 300,000 barrels a day, to roughly 10.3 million bpd as early as September. In June, the kingdom produced more than 10.5 million barrels a day, amounting to its highest level on record.
London-traded Brent futures are down nearly 16% in July amid concerns a resumption of Iranian oil exports will add to a global glut.
Iran and six world powers reached a long-awaited nuclear deal earlier in the month that would end sanctions on Tehran in exchange for curbs on the country's disputed nuclear program. Iran reportedly hoards 30 million barrels of oil in its reserves ready for export.
Reports of record high oil exports from Iraq and robust production from Saudi Arabia also contributed to losses.
Elsewhere, on the New York Mercantile Exchange, crude oil for September delivery inched up 4 cents, or 0.07% to trade at $48.83 a barrel.
On Wednesday, Nymex oil futures jumped to $49.52, the strongest level since July 23, before closing at $48.97, up 81 cents, or 1.69%, following the release of encouraging weekly data on U.S. oil supplies.
Crude oil inventories fell by 4.2 million barrels last week to 459.7 million, according to the U.S. Energy Information Administration. Market analysts' expected a crude-stock fall of 0.2 million.
New York-traded oil futures are on track to post an 18% drop in July, amid ongoing worries over high domestic U.S. oil production.
According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. increased by 21 last week to 659, the most since May.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $4.92 a barrel, compared to $4.41 by close of trade on Wednesday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% to 97.41 early on Thursday, improving from 97.08 by close of trade on Wednesday.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
The greenback was boosted after the Fed described the economy as expanding "moderately," while upgrading its view of the labor and housing markets.
The central bank gave no clear indication of the timing of the next rate hike, but left itself room to act as early as September, citing "solid" gains in the job market and "additional" improvement in the housing sector.
The U.S. was to release figures on second quarter growth later in the day, which were expected to show that the economy rebounded 2.6%, following a 0.2% contraction in the first quarter after an unusually harsh winter.