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Oil prices fall for second day on oversupply concerns

Oil prices fell on Tuesday, declining for a second day and sapping more strength from a third-quarter rally, amid signs that a global glut in crude may not be clearing as quickly as some had hoped.

U.S. crude (CLc1) was down 15 cents, or 0.3 percent, at $50.43 a barrel by 0649 GMT, after closing the previous session down $1.09, or 2.1 percent.

The U.S. benchmark posted a third quarter gain of around 12 percent, its strongest quarterly climb since the second quarter of 2016, but has now dropped nearly 5 percent from a six-month high reached on Thursday.

Brent crude (LCOc1), the global benchmark, was down 26 cents, or 0.5 percent, at $55.86 a barrel. The contract fell 67 cents, or 1.2 percent, in the last session.

Brent had notched up a third-quarter gain of about 20 percent, the biggest increase for that quarter since 2004 and traded as high as $59.49 last week. It is down about 6 percent from that level.

"The fourth quarter is not too kind to the price of oil, as we switch from summer demand to expectations of winter demand," said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney. "A lot of (refinery) maintenance occurs at this time so feeder demand is not there."

Iraq said on Monday that exports rose slightly in September from its southern oilfields, while an earlier Reuters survey indicated that overall the Organization of the Petroleum Exporting Countries (OPEC) boosted output.

Oil prices climbed last week on tension in Iraqi Kurdistan after the region's independence vote, with Turkey threatening to close a pipeline that brings oil from the region in northern Iraq to the Mediterranean.

Turkey has not carried out the threat, analysts said.

The recent rally had also been driven by signs that a three-year crude glut is easing, helped by a production cut deal among global producers led by OPEC.

However, Middle Eastern oil producers are concerned the price rise will stir U.S. shale producers into more drilling and push prices lower again. Key OPEC producers consider a price above $60 as encouraging too much shale output.

One bullish sign was a letter from Libya's National Oil Company on Monday that declared force majeure on deliveries from Sharara, the country's largest oilfield. ​

Global shares score latest record high, dollar flexes muscle

World shares hit their latest in a run of record highs on Tuesday, while the dollar was at it loftiest in 1-1/2 months as encouraging U.S. data lifted it in tandem with global bond yields.

MSCI's 47-country 'All-World' index which contains more than 2,400 firms was pushed to the fresh peak as Europe's main bourses added to gains made in Asia and after Wall Street set its own record close again overnight.

It was the tenth new high since late July alone and extends the year's blizzard of records that started in February to more than 40 with no sign it is about to run out of steam yet.

SEB investment management's global head of asset allocation Hans Peterson pointed to strong economic and trade data and signs that firms in large economies like the United States and Europe were finally increasing investment spending.

"The fun thing about that is that is will take over from the consumption cycle and means the (global business growth) cycle will be longer than consensus. So I think that is the mechanism that is driving equities at the moment."

"So we are long equities, we are long emerging markets and we are long Europe. We are risk on."

Currency and bond markets were also flashing similar signals, especially that the 'Trumpflation' trade, which looked to be fatally wounded just a few months ago, was back in force.

The dollar climbed 0.2 percent to 93.74 (DXY) against a broad basket of other top world currencies. [/FRX]

That was its highest level since Aug. 17 and came as a firming view that the Federal Reserve will raise U.S. interest rate for a third time this year in December kept two-year U.S. government bond yields (US2YT=RR) hovering at a 9-year high.

Borrowing costs across the euro zone nudged higher too. Southern European bonds continued to underperform meanwhile as political tensions remained in Spain after Sunday's independence vote in Catalonia was marred by police violence.

The uncertainty also kept the squeeze on the euro. It dipped 0.2 percent to $1.1709 while the dollar added 0.3 percent against the yen to 113.11 yen to keep it within reach of last week's two-month high of 113.26 yen.

Crude oil futures extended losses after tumbling on Monday, as a rise in U.S. drilling and higher OPEC output put the brakes on their recent rally and rekindled concerns about oversupply.

Brent crude (LCOc1) slipped 0.4 percent to $55.90 a barrel, after marking a third-quarter gain of about 20 percent. U.S. crude (CLc1) fell 0.3 percent to $50.42.

"The fourth quarter is not too kind to the price of oil, as we switch from summer demand to expectations of winter demand," said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.

Spot gold edged down 0.1 percent to $1,270.06 per ounce, plumbing its lowest since Aug. 15 as the dollar continued to strengthen.

Trump to top U.S. diplomat: Don't bother talking to North Korea

U.S. President Donald Trump on Sunday dismissed the prospect of talks with North Korea as a waste of time a day after his own secretary of state said the United States was maintaining open lines of communication with North Korean leader Kim Jong Un.

"I told Rex Tillerson, our wonderful secretary of state, that he is wasting his time trying to negotiate with Little Rocket Man," Trump wrote on Twitter, using his sarcastic nickname for Kim and seeming to contradict the top U.S. diplomat.

Trump, who has traded insults and threats with Kim in recent weeks amid escalating tensions over Pyongyang’s nuclear and missile programs, later tweeted that his White House predecessors, Bill Clinton, George W. Bush and Barack Obama, had all "failed" on North Korea by "Being nice to Rocket Man."

"So why would it work now?" he asked.

Kim succeeded his father, Kim Jong Il, as North Korean leader in 2011, during Obama's administration. Previous presidents negotiated with Pyongyang but ultimately failed to prevent it from pressing ahead with its internationally condemned weapons programs.

Tillerson disclosed on Saturday that the United States was directly communicating with North Korea on its nuclear and missile programs but that Pyongyang had shown no interest in dialogue.

"Save your energy Rex, we'll do what has to be done!" Trump said.

Tillerson said during a trip to China that the United States had multiple direct channels of communication with Pyongyang, the first such disclosure by the Trump administration, and that it was probing North Korea to see if it was interested in dialogue.

Tillerson expressed hope for reducing tensions with North Korea, which is fast advancing toward its goal of developing a nuclear-tipped missile capable of hitting the U.S. mainland.

"We are probing, so stay tuned," Tillerson told a small group of reporters. "We ask: 'Would you like to talk?'" He said the United States had "a couple of, three channels, open to Pyongyang."

In Beijing on Monday, China's foreign ministry said it supported dialogue.

"We consistently support the United States and North Korea engaging in dialogue and contact to promote mutual understanding and resolve related issues through consultations," it said in an emailed response to a Reuters query on Tillerson's revelations about contact with North Korea.

AIDES DOWNPLAY COMMUNICATIONS CHANNELS

A senior Trump administration official, asked for clarification about Trump's Sunday morning tweets, played down the significance of the communication channels.

"At a time when North Korea is continuing its provocations, the president does not think now is the time to negotiate with them," the official said, speaking on condition of anonymity.

To the extent that diplomatic channels exist between Washington and Pyongyang, they are aimed at securing the return of Americans detained by North Korea, the official added.

R.C. Hammond, an adviser to Tillerson, denied that his boss had been undercut by Trump’s tweets and rejected any suggestion that the secretary of state should resign.

"Let's resign the idea of resignation. The President just made it clear to the Kim regime the diplomatic offer on the table is cooling," Hammond said on Twitter.

He also downplayed any contacts.

"Channels have been open for months. They've been unused and cooling for months," Hammond wrote.

State Department spokeswoman Heather Nauert made a similar point on Sunday. "Diplomatic channels are open for #KimJongUn for now. They won't be open forever," she wrote on Twitter.

U.S. Representative Adam Schiff, the top Democrat on the House of Representatives Intelligence Committee, wrote on Twitter: "If Tillerson is wasting his time, it’s only because his boss fails to understand the catastrophic consequences of war on the Korean peninsula."

Trump's rhetoric on North Korea has run the gamut, from personal attacks on Kim to veiled military threats, from a denial of any interest in talks to an insistence that he would prefer a diplomatic solution.

After announcing new U.S. sanctions on North Korea last month, he acknowledged diplomacy was still possible, asking: "Why not?".

But he has also frequently declared that he had military options at its disposal, although U.S. officials and outside experts have long said a U.S. strike on North Korea would risk massive casualties.

Euro ruffled by Spanish vote; Asia data cheer stocks

The euro took a knock in Asia on Monday as investors kept an anxious eye on an independence vote in Spain's Catalonia, while surprisingly strong economic news out of China and Japan offered support to equities and commodities.

The euro fell 0.3 percent after the violence-marred vote to trade at $1.1773, though European bourses seemed less troubled with financial bookmakers pointing to small opening gains for the major indices.

Spanish police used batons and rubber bullets to thwart an independence vote in Catalonia on Sunday in a show of force that left hundreds injured, according to Catalan officials, and presented Madrid with a huge challenge to calm tensions in the region.

The situation was fluid, with the head of the regional government opening the door to a potential declaration of independence from Spain.

Dealers emphasised there had been no major selling of euros as yet and neither was there any flow to safe havens, with investors reserving judgement.

As a result, the dollar was firmer on the Japanese yen at 112.86 and up 0.3 percent on a basket of currencies at 93.349. Gold eased in response to $1,274.24.

The dollar was aided by speculation President Donald Trump might choose former Federal Reserve Governor Kevin Warsh to head the central bank.

Warsh is considered more hawkish than current chair Janet Yellen so his appointment might lead to faster hikes in interest rates. The risk was enough to nudge yields on two-year Treasuries up to 1.503 percent, ground not visited since late 2008.

ASIA GROWTH ON A ROLL

Asian shares were faring better than bonds after upbeat economic data from China, Japan and South Korea augured well for a sustained pickup in global growth.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.27 percent, while E-Mini futures for the S&P 500 rose 0.11 percent.

Australia's main index jumped 1 percent, while Japan's Nikkei inched up 0.14 percent after a survey of manufacturers produced the strongest sentiment reading in a decade.

China's manufacturing activity grew at the fastest pace since 2012 in September as factories cranked up output to take advantage of strong demand and high prices.

The official Purchasing Managers' Index (PMI) released on Saturday rose to 52.4 in September, from 51.7 in August.

"This was the first time new orders beat output this year, suggesting a potential 'excess demand' to some extent," wrote analysts at ANZ in a note.

"It also provides upside risk for Q3 GDP and our forecast of 6.7 percent for 2017."

Higher memory chip and steel product sales helped South Korea's exports surge 35 percent year-on-year to a record in September, notching the longest stretch of expansion since 2011.

China's central bank also cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lacklustre private sector.

All of which was considered positive for commodity demand. Copper enjoyed its fifth consecutive quarterly gain on expectations of strong demand from top metals consumer China.

Three-month copper rose a further 0.8 percent on Monday to stand at $6,534 a tonne. [MET/L]

In oil markets, Brent boasted its strongest third-quarter price performance since 2004 amid firm global demand and supply restrictions. [O/R]

On Monday, Brent for December delivery was off 23 cents at $56.56 a barrel, while U.S. crude eased 15 cents to $51.52.

Asia shares recuperate after rough week, dollar in better health

Asian shares regained some poise on Friday after a tough week in which the gathering risk of a U.S. rate rise lifted Treasury yields toward nine-year highs and left the dollar on track for its best week so far this year.

European markets have fared much better with Eurostoxx 50 futures at a three-month top in early trade, while the DAX and FTSE both added 0.2 percent.

E-Mini futures for the S&P 500 were steady near all-time peaks.

MSCI's broadest index of Asia-Pacific shares outside Japan bounced 0.4 percent, but was still down 1.7 percent for the week so far. For the quarter, it looked set to gain 4.7 percent.

Japan's Nikkei was a fraction lower, though South Korea managed to rebound 0.8 percent. Shanghai shares firmed 0.2 percent but were flat on the week.

Many Asian markets have been cold-shouldered this week as investors priced in a greater probability of a rate hike from the Federal Reserve in December.

Fed funds futures <0#FF:> now imply around a 73 percent chance of a move at the Dec. 12-13 policy meeting, sharply higher than just a few weeks ago.

As a result, yields on two-year Treasuries reached a near nine-year top before settling at 1.46 percent on Friday. They had been as low as 1.254 percent early in September.

Adding to the upward pressure was President Donald Trump's proposals for steep tax cuts which, if passed, could benefit U.S. corporations' profit margins.

The plan, however, lacked any detail on how it might be paid for and faces much opposition in Congress.

"As tax negotiations intensify, significant procedural, fiscal and political constraints are likely to become apparent," cautioned Richard Franulovich, an analyst at Westpac, while noting the economic benefits of the plan were also in doubt.

"The size of the tax cut is simply too large to be realistic and repealing deductions will prove politically difficult."

Still, a tax cut that made U.S. equities more attractive while lifting the dollar and Treasury yields would likely prove negative for emerging markets, particularly those that relied heavily on foreign investment. [EMRG/FRX]

The risk alone was enough to rattle share, bond and currency markets in Asia on Thursday, and they will remain vulnerable to headlines on the tax package as it moves through Congress.

DOLLAR REPRIEVE

The jump in Treasury yields proved a much-needed tonic for the U.S. dollar.

Against a basket of currencies the dollar was up 0.18 percent at 93.250, while gains for the week of 1.17 percent were the largest since December.

The euro hovered at $1.1776, having bounced from a six-week trough of $1.1715, but was still down 1.5 percent for the week so far. If it remains there, that would be the largest weekly loss since November 2016. [USD/]

The dollar was also on track for its third week of gains on the Japanese yen at 112.66, just off a peak of 113.26.

On Wall Street, the Dow had ended Thursday with a minor gain of 0.18 percent, while the S&P 500 added 0.12 percent and the Nasdaq was flat. (N)

All three were at or near record highs, stirring concerns about rich valuations.

The forward price-to-earnings ratio (P/E) on the S&P stood at 17.9 compared with its long-term average of 15.1, while the forward P/E on the Russell is 26.3 against an average of 21.3.

Important data on inflation from the European Union and the United States are due later in the session, along with economic growth figures in Canada.

Early readings on Chinese manufacturing are out on Saturday ahead of a week-long holiday in the Asian giant.

The EU also faces more political uncertainty on Sunday when Catalan separatists are set to defy Spanish efforts to block an independence referendum.

In commodity markets, oil prices were near to chalking up another weekly gain as investors wagered that efforts to cut a global glut are working and the demand outlook is improving.

Brent was 7 cents higher at $57.48 a barrel, heading for a fifth weekly climb and a 10-percent gain for September. U.S. crude eased 9 cents to $51.48.

Dollar set for best weekly gain in 2017; focus on Trump tax plan, Fed outlook

The dollar inched higher against a basket of major currencies on Friday and was on track for its biggest weekly gain so far this year as investors pondered the Trump administration's tax plan and the outlook for Federal Reserve policy.

The dollar index edged up 0.1 percent to 93.211 (DXY).

While that was down from Thursday's near six-week high of 93.666, the index has still risen 1.1 percent this week, putting it on track for its biggest weekly gain since December.

The dollar has risen on renewed hopes for U.S. tax reform, as well as comments from Federal Reserve Chair Janet Yellen that stressed the need for gradual interest rate hikes.

Profit-taking and caution about political hurdles facing the U.S. tax plan seem to be tempering the dollar's momentum, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

"We've been down this tax reform road before, and I don't think it's going to be easy... There's going to be a lot of back and forth, a lot of squabbling," Innes said.

The White House struggled on Thursday to defend its new tax plan against criticism that it would help the rich at the expense of lower classes, as Republicans in Congress prepared to move ahead with actual legislation.

President Donald Trump had unveiled a plan on Wednesday that calls for lower tax rates for businesses and individuals as part of a comprehensive overhaul of the U.S. tax code.

Against the yen, the dollar edged up 0.3 percent to 112.66 yen . On Wednesday, the dollar had reached a 2-1/2 month high of 113.26 yen, buoyed by a rise in U.S. bond yields.

Later on Friday, investors will turn their focus to U.S. economic data, including the personal consumption expenditures (PCE) price index for August.

One focus for next week is U.S. job data due on Oct. 6.

"The immediate focus would be whether the market can look through the data volatility in the U.S.," said Sim Moh Siong, FX strategist for Bank of Singapore, adding that the nonfarm payroll data is likely to reflect the effects from Hurricanes Harvey and Irma.

The euro eased 0.1 percent to $1.1777 , but remained above Wednesday's trough of $1.1717, the common currency's lowest level in more than a month.

The common currency has rallied nearly 12 percent against the dollar so far this year as worries about the rise of anti-establishment political forces in Europe faded while expectations rose for tapering the European Central Bank’s stimulus.

The euro, however, has been weighed down this week after the results of elections in Germany on Sunday. Chancellor Angela Merkel won a fourth term in office but will have to build an uneasy coalition to form a government.

Sterling eased 0.2 percent to $1.3418 .

On Thursday, it had gained 0.4 percent, after Britain's Brexit secretary said "considerable progress" had been made in talks and the EU's chief negotiator praised a "new dynamic" from the prime minister

Crude Oil Prices Extend Gains After Surprise Drop in U.S. Stockpiles

Oil prices edged higher on Wednesday, extending gains after data from the U.S. Energy Information Administration showed domestic crude stockpiles declined for the first time in four weeks as refiners raised output.

U.S. West Texas Intermediate (WTI) crude futures tacked on 25 cents, or around 0.5%, to $52.13 a barrel by 10:35AM ET (1435GMT). Prices were at around $52.05 prior to the release of the inventory data.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., shed 26 cents, or about 0.5%, to $57.66 a barrel. It reached a 26-month peak of $58.88 a day earlier.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 1.8 million barrels in the week ended September 22.

Market analysts' expected a crude-stock gain of around 3.4 million barrels, while the American Petroleum Institute late Tuesday reported a surprise supply-drop of 761,000 barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 1.1 million barrels last week, the EIA said.

Total U.S. crude oil inventories stood at 471.0 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.

The report also showed that gasoline inventories rose by 1.1 million barrels, disappointing expectations for a decline of 921,000 barrels. For distillate inventories including diesel, the EIA reported a fall of 814,000 barrels.

According to the data, domestic production rose 0.4% to reach the highest level since July 2015.

Oil futures finished lower Tuesday for the first time in three sessions, but losses were capped amid growing optimism that the crude market was well on its way towards rebalancing.

Prices have gained roughly 20% from their June lows, meeting the definition of a bull market, as data showed strong compliance from major producers with their supply cut agreement and as talk grows of a likely extension of the deal.

In May, OPEC and non-OPEC members led by Russia agreed to extend production cuts of 1.8 million barrels per day for a period of nine months until March 2018 in a bid to reduce global oil inventories and support oil prices.

U.S. tax plan pulls dollar up for fourth day; doubts emerge

The dollar gained for a fourth consecutive day on Thursday as a rise in U.S. Treasury yields encouraged investors to trim their short bets, although markets grew cautious of chasing it higher as the currency approached the top of recent trading ranges.

The dollar climbed to a one-month high against a basket of currencies (DXY) and is on track to post its best weekly performance this year on hopes that U.S. President Donald Trump's administration may be making progress on tax reforms.

"We are in correction mode on the dollar as there is really nothing fundamental that has changed for the U.S. outlook and the ambitious tax plan lacks a lot of details," said Viraj Patel, an FX strategist at ING Bank in London.

The dollar was trading 0.24 percent higher against a basket of currencies (DXY). It has gained 2.5 percent since hitting a 2 1/2-year low of 91.35 in mid-September.

Trump on Wednesday proposed the biggest U.S. tax overhaul in three decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could widen the U.S. budget deficit.

The proposal faces an uphill battle in the U.S. Congress, with Trump's own Republican Party divided over it and Democrats hostile.

But the unveiling of the plan, along with recent hawkish rhetoric from the U.S. central bank, has raised the likelihood of a U.S. rate increase by December to 70 percent compared with less than a third a month earlier. Speculators began to unwind short dollar bets, which had swollen to multi-year highs.

"This is probably the best time for the U.S. to raise interest rates, as short-term growth indicators look robust and market volatility is near record lows and financial markets healthy and near record highs," said Yassir Benjelloun Touimi, a portfolio manager at Dalton Strategic Partnership LLP in London.

The U.S. 10-year Treasury yield (US10YT=RR) rose to 2.3590 percent, its highest level since mid-July and was nearing the top end of a trading range established since early May.

Including the current move, the U.S. 10-year yield has risen more than 12 basis points - putting it on track for its biggest two-day rise in more than seven months.

The dollar's gains were more pronounced against currencies where the domestic story has worsened in recent days, such as the euro and the Japanese yen

Japanese Prime Minister Shinzo Abe called a snap election as the main opposition Democratic Party threw its support behind a fledgling party led by Tokyo's popular governor, Yuriko Koike, in the Oct. 22 vote. The euro has struggled this week after the unexpected outcome of the German elections.

Morgan Stanley strategists said in a daily note a leadership change in Japan could affect domestic risk appetite and the yen.

Wall St. ends flat after Yellen; tech shares bounce

The S&P 500 ended flat on Tuesday and the Nasdaq posted modest gains as technology shares bounced from sharp losses in the prior session and comments from Fed Chair Janet Yellen boosted expectations of a December rate hike.

Yellen said the Fed needs to continue gradual rate hikes and it would be imprudent to leave rates on hold until inflation reached the Fed's 2-percent target.

Earlier in the session, Atlanta Fed Chief Raphael Bostic, a non-voting member this year, said he would want "clear evidence" that prices were firming before committing to another rate increase, but did not rule out another hike in 2017.

Chances of a rate hike in December rose to 78 percent from about 40 percent a month ago, according to CME Group's FedWatch tool.

"Investors should be looking out for a December hike given we don’t know what happens to the Fed chair position next year. (Yellen), probably wants to be able to, knowing anyone new in that role might not feel comfortable tightening the first month," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

Economic data showed U.S consumer confidence fell in September while home sales dropped to an eight-month low in August due to the impact of Hurricanes Harvey and Irma.

The Dow Jones Industrial Average (DJI) fell 10.05 points, or 0.05 percent, to 22,286.04, the S&P 500 (SPX) gained 0.23 points, or 0.01 percent, to 2,496.89 and the Nasdaq Composite (IXIC) added 9.57 points, or 0.15 percent, to 6,380.16.

Technology (SPLRCT), up 0.4 percent, was the best performing major sector, recovering somewhat from losses in the prior session. Tech shares suffered their worst one-day drop in five weeks on Monday as concerns over tensions with North Korea prompted investors to book profits in what has been the best performing sector this year.

Apple (O:AAPL) rose 1.72 percent after four straight sessions of losses to help prop up the three major indexes, after Raymond James boosted its price target on the iPhone maker to $180 from $170.

"It is a little bit of a relief knowing perhaps investors still believe in buying the dips even after the Fed’s announcement of reduced balance sheet purchases," said Ablin.

President Donald Trump warned North Korea any U.S. military option would be "devastating" for Pyongyang, but said the use of force was not Washington's first option to deal with the North's ballistic and nuclear weapons program.

Darden Restaurants (N:DRI) slumped 6.53 percent after the Olive Garden parent said it expected the negative effects on sales and earnings from Hurricane Irma to be about double that from Hurricane Harvey.

Red Hat (N:RHT) rose climbed 4.09 percent after the Linux distributor's quarterly profit came in above estimates and the company raised its full-year forecast.

Advancing issues outnumbered declining ones on the NYSE by a 1.31-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers.

About 5.81 billion shares changed hands in U.S. exchanges, compared with the 5.96 billion daily average over the last 20 sessions.

Oil prices gain after U.S. inventories unexpectedly draw amid rising demand

Oil prices rose on Wednesday, with the Brent benchmark hovering near a 26-month high hit in the previous session, after U.S. oil inventories unexpectedly declined as refiners raised output and amid threats from Turkey to cut crude exports from Iraq.

Brent crude for November delivery was up 29 cents, or 0.5 percent, at $58.73 a barrel, as of 0603 GMT. It settled down 1 percent on Tuesday, after earlier hitting $59.49, its highest since July 2015 and more than 34 percent above its 2017 low.

U.S. crude for November delivery rose 34 cents, or 0.7 percent, to $52.22 a barrel, having settled down 0.7 percent in the previous session after hitting a five-month high of $52.43.

Oil prices have been supported by output curbs of 1.8 million barrels per day by the Organization of Petroleum Exporting Countries (OPEC), and cuts by other major producers, although U.S. crude has lagged behind Brent amid concerns that U.S. production growth could stoke oversupply.

U.S. crude stocks fell by 761,000 barrels last week as refineries boosted production, while gasoline inventories increased and distillate stocks fell, data from industry group American Petroleum Institute showed on Tuesday, in contrast with market expectations.

Refinery crude runs rose by 1.3 million barrels per day, API data showed.

U.S. crude inventories were seen rising for a fourth straight week, an extended Reuters poll showed on Tuesday.

"There's pretty strong upward momentum at the moment," said Ric Spooner, chief market analyst at CMC Markets in Sydney, referring to a better-than-expected near-term supply balance outlook.

Crude oil production in Texas, one of the biggest producers of shale oil in the United States, in July fell less than 1 percent compared with a year ago, the state's energy regulator said on Tuesday.

Any sign of faltering U.S. output could be seen as positive for prices amid growing global oil demand.

"Going forward, oil is likely to remain supported as supply disruptions, combined with solid global demand, will probably continue to lift prices," ANZ said in a research note.

Monroe Energy, a subsidiary of Delta Air Lines (NYSE:DAL), ran out of crude oil at its 185,000 barrels-per-day Trainer, Pennsylvania, refinery amid shipping delays due to rough seas caused by Hurricanes Jose and Maria, according to a source familiar with the company's operations and Reuters shipping data.

The U.S. Energy Information Administration (EIA) will release official government inventory data at 10:30 a.m. EDT.

Turkish President Tayyip Erdogan on Tuesday repeated a threat to cut off the pipeline that carries 500,000-600,000 barrels per day (bpd) of crude from northern Iraq to the Turkish port of Ceyhan in retaliation for an independence referendum in Iraqi Kurdistan.