Oil prices were up more than one per cent on Wednesday with market bulls targeting $50 a barrel and beyond on expectations the U.S. government will report a large crude stockpiles drawdown for last week.

The American Petroleum Institute, a trade group, said on Tuesday that U.S. crude inventories fell by 5.1 million barrels in the week to May 20, twice what analysts expected.

The U.S. Energy Information Administration said it would issue an official stockpiles data later on Wednesday.

Wildfires in Canada's oil sands region as well as a near economic meltdown in OPEC member Venezuela cut nearly four million barrels per day in global crude flows.

Besides, there is a spate of violent attacks against the Libya and Nigerian energy industries which have global crude flows.

The shortfall has accelerated the recovery in oil prices, which are up nearly 90 per cent from winter lows of around $27 for Brent crude and about $26 for the U.S. West Texas Intermediate.

“We look for new highs ... in carrying this advance higher to around the $52-52.50 area before this spring advance fully plays out,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Co.

Brent LCOc1 was up 76 cents, or 1.6 per cent, at $49.37 a barrel on Wednesday. The session high was $49.39 while the WTI CLc1 rose 60 cents, or 1.3 percent, to $49.22, peaking at $49.45.

Oil traded above $100 a barrel in mid-2014 before crashing on a global supply glut.

“We are definitely moving out of this surplus situation that we've been living in since mid-2014,” Bjarne Schieldrop, head commodities strategist at SEB Merchant Banking in Geneva, said.

“There will still be some time, maybe six months of surplus, but then we're basically into rebalancing.”

Some argue that the outages are temporary and crude flows will be restored to optimum levels eventually, pressuring prices.

“Maybe it’s silly to stand in front of this bus, but I would at least suggest that the bulls be careful here,” Scott Shelton, energy broker at ICAP in Durham, North Carolina, wrote in a commentary. (Reuters/NAN)

•Photo shows oil barrels.

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