Investing.com - Crude oil prices edged lower on Tuesday, but remained close to multi-month highs amid optimism that the market was well on its way towards rebalancing.
U.S. West Texas Intermediate (WTI) crude futures dipped 24 cents, or around 0.5%, to $51.98 a barrel by 3:35AM ET (0735GMT). It traded as high as $52.43 intraday, a level last seen since April 19.
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., shed 28 cents, or about 0.5%, to $58.15 a barrel. It reached a 26-month peak of $58.88 earlier in the session.
Futures rallied more than 3% on Monday as traders cheered ongoing signs that the market is starting to rebalance.
Oil 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.
OPEC and non-OPEC compliance with the deal to curb output rose to 116% in August, a strong increase from the 94% compliance achieved a month ago.
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.
Russia’s energy minister suggested that January is the earliest date that an extension to the global accord can be considered, although other ministers suggested such a decision could be taken before the end of this year.
The committee’s next meeting is set for November 29 in Vienna, just a day ahead of OPEC’s regularly scheduled meeting.
Turkey's threat to cut off a major pipeline that carries oil from from Iraq's Kurdistan region to the outside world provided further support. The pipeline to Turkey's port of Ceyhan usually pumps between 500,000-600,000 barrels per day.
Elsewhere, in the U.S., market participants mulled over data showing the number of oil rigs continued to decline, suggesting a possible tightening in domestic production.
Oilfield services firm Baker Hughes said its weekly count of oil rigs operating in the U.S. declined by 5 to 744, marking the third weekly decline in a row.
The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand.
Investors now looked ahead to weekly data from the U.S. on stockpiles of crude and refined products to weigh what the impact of recent storm activity was on supply and demand.
Industry group the American Petroleum Institute is due to release its weekly report at 4:30PM ET (2030GMT).
Official data from the Energy Information Administration will be released Wednesday, amid forecasts for an oil-stock gain of around 2.3 million barrels, which would mark the fourth weekly increase in a row.
Demand for U.S. crude has weakened in the wake of Hurricane Harvey, which forced the closure of nearly 25% of U.S. refining capacity.
Elsewhere, gasoline futures were at $1.669 a gallon, down 0.3%, while natural gas futures added 0.5% to $3.003 per million British thermal units.