The Elevation Resources drilling rig is shown at the Permian Basin drilling site in Andrews County Texas
By Jessica Resnick-Ault
(Reuters) - Crude oil prices turned positive on Tuesday, reversing course on reports that Saudi Arabia has told OPEC officials it wants to continue output cuts for an additional six months.
Oil futures have been pinned in a range, supported by production cuts from the Organization of Petroleum Exporting Countries cartel and other producing states but capped by rising U.S. shale oil production.
The market, which retreated early in U.S. trading, turned positive after reports that Saudi Arabia said it wants to extend production cuts enacted in January for another six months when the group meets in May, according to the Wall Street Journal. OPEC members have previously said they lean towards oil cut extensions, as long as non-members are also involved.
Brent crude (LCOc1), the international benchmark for oil, settled up 25 cents at $56.23 a barrel, its highest since March 7.
Brent has risen in each of the previous seven sessions, while WTI gained for the last six. Early in the day, prices had retreated on expectations U.S. inventories could climb again.
U.S. West Texas Intermediate (WTI) (CLc1) rose 32 cents to $53.40 a barrel, surpassing a five-week high.
In post-settlement trade both grades got a boost as industry group the American Petroleum Institute said U.S. crude inventories has fallen by nearly 1.3 million barrels a day, defying expectations that they would increase 87,000 barrels in the week.
U.S. crude inventories have touched record highs at the U.S. storage hub of Cushing, Oklahoma, and in the U.S. Gulf Coast in recent weeks, according to U.S. government data. If confirmed by U.S. Energy Information Administration figures on Wednesday, oil could get another boost.
Analysts said, however, that there are worries demand growth could falter, and other indicators were warning that the market had not yet cleared enough of its surplus to keep prices rising.
"There's a lot of heightened geopolitical tension on two fronts," said Phil Streible, senior market strategist at RJO futures in Chicago. Rising concerns about North Korea and Syria may depress oil demand, he said.
North Korean state media warned on Tuesday of a nuclear attack on the United States at any sign of American aggression as a U.S. Navy strike group steamed towards the western Pacific.
U.S. President Donald Trump said in a Tweet that North Korea was "looking for trouble" and the United States would "solve the problem" with or without China's help.
"Geopolitical tensions are bad for global demand growth," said Olivier Jakob, managing director of Petromatrix, noting rising acrimony between the United States and North Korea.
He also said the widening discount of the current Brent crude price to the contract in the next month is "basically telling you the market is not actually that tight."
(Reporting by Jessica Resnick-Ault; Editing by Dan Grebler and Cynthia Osterman)