By Edmund Blair
LONDON (Reuters) - Oil prices rose more than $1 on Wednesday, lifted by a surprise drawdown in U.S. inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts should create a crude deficit in the first half of 2017.
"For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve," the IEA said in its monthly report.
Investors are now watching for weekly U.S. Energy Information Administration (EIA) figures to see if it confirms a fall in U.S. inventories, after the surprise drop reported in the American Petroleum Institute's weekly report on Tuesday.
EIA data is due out at 1430 GMT.
Brent futures rose more than $1 from Tuesday's close. By 1318 GMT, oil given up some of those gains, up 70 cents at $51.62 a barrel. Prices had hit a three-month low of $50.25 during the previous day's trading.
U.S. West Texas Intermediate crude was up 74 cents at $48.46, after also climbing more than $1 during Wednesday's trading. On Tuesday, the price fell to $47.09, also the lowest since November.
The IEA said global inventories rose in January for the first time in six months despite OPEC output cuts, but said if it stuck to its production curbs the market should see a deficit of 500,000 barrels per day (bpd) in the first half.
"As long as OPEC stays on track and non-OPEC delivers on their agreed cuts, the market will continue to balance," said Ole Hansen, head of commodity strategy at Saxo Bank.
The Organization of the Petroleum Exporting Countries said at the end of November it would cut 1.2 million bpd during the first half of 2017, and in December that non-OPEC producers would cut about 600,000 bpd from their output.
Despite OPEC compliance with its share of the cuts, stockpiles have continued to rise, in part because OPEC members pumped heavily before cuts kicked in and also because U.S. shale producers have raised output as Brent spiked above $58 in January. Oil prices have now given up the gains.
Investors were alarmed earlier in March when data from the API showed a big jump in U.S. inventories to a record 529.6 million barrels. But API's latest weekly report on Tuesday showed a surprise fall to 529.1 million barrels, defying forecasts of another rise.
Harry Tchilinguirian, global head of commodity strategy at BNP Paribas, said the IEA was encouraging calm among investors.
"It is really just words to assuage impatience in the market, highlighting it takes time for production restraints to filter through in the form of inventory reductions," he said.
(Additional reporting by Aaron Sheldrick and Osamu Tsukimori; editing by David Clarke and Louise Heavens)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)