Oil prices seemed to be in recovery mode on Wednesday, after the U.S. Energy Information Administration said crude inventories south of the line decreased by 2.5 million barrels from the previous week.
Oil cut earlier losses, but braced itself for its biggest price drop in the first half of the year since 1997, a sign that investors are discounting evidence that major producers are sticking to a deal to cut output.
August Brent crude futures were up 31 cents at $46.33 U.S. a barrel, having fallen earlier to seven-month lows at $45.53.
U.S. crude futures were up 42 cents at $43.93, having hit their lowest since September on Tuesday.
So far this year, oil has lost 20% in value, its weakest performance for the first six months of the year since 1997.
Compliance with an agreement by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to cut output by 1.8 million barrels per day from January reached its highest in May since the curbs were agreed last year.
Sources said OPEC and non-OPEC oil producers' compliance with the output deal reached 106% in May. That means they cut output by more than they were required to do.
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