SINGAPORE (Reuters) - Oil bounced back from one-week low on Thursday as the International Energy Agency (IEA) said global oil markets were tightening with demand rising and focus turning toward cuts promised by OPEC and other producers.
Sentiment in oil markets has been torn between expectations of a rebound in U.S. shale production and hopes that oversupply may be curbed by output cuts announced by the Organization of the Petroleum Exporting Countries (OPEC) and others producers.
The IEA said on Thursday it has kept demand estimates for OPEC crude oil for 2017 steady at 32.9 million barrel per day (bpd) as compared with production of 33.09 million bpd in December.
As OPEC has pledged to make additional cuts, the agency said world markets are slowly tightening because of rising demand.
The international benchmark for oil prices, Brent crude rose 58 cents, or 1.1 percent to $54.50 a barrel by 0912 GMT after closing down 2.8 percent in the last session.
U.S. West Texas Intermediate crude oil was trading up 53 cents at $51.60 per barrel, having dropped to a one-week low on Wednesday at $50.91 a barrel.
"Some bargain hunters are happy to pick up oil at the bottom of the range," said Ben Le Brun, market analyst at OptionsXpress in Sydney.
"We are just watching for the next catalyst which could come from OPEC, non-OPEC, U.S. shale producers, rig count and, of course, inventories...But still the market appears to be very range bound."
The market is awaiting weekly inventory data from the U.S. Energy Information Administration (EIA), due at 1600 GMT. It has been delayed by a day due to a U.S. public holiday on Monday.
Data from the American Petroleum Institute (API) showed U.S. crude stocks fell by 5.04 million barrels in the week to Jan. 13. Analysts had expected a decrease of 342,000 barrels.
OPEC said producer cuts agreed late last year should help stabilise the oil market in 2017, with the exporter group's output slipping and non-members complying with their production pledges. But the organization also pointed to the possibly of a rebound in U.S. output amid higher oil prices.
OPEC, excluding Indonesia, pumped 33.085 million barrels per day last month, according to figures the body collects from secondary sources, down 221,000 bpd from November, it said in a report on Wednesday. The figures showed the biggest reduction came from Saudi Arabia.
The dollar, which influences moves in greenback-priced commodities, kept broad gains against its major rivals, after rebounding sharply on Wednesday on comments by Federal Reserve Chair Janet Yellen suggesting U.S interest rates could be raised quickly this year.
(Reporting by Naveen Thukral; Editing by Joseph Radford and Sonali Paul)