SINGAPORE - Oil prices rose on Friday as both U.S. crude production and inventories declined, pointing towards a tightening market.
Strong Chinese oil import data also supported crude prices, traders said.
With the Organization of the Petroleum Exporting Countries (OPEC) leading a production cut, analysts said that global oil markets were now broadly balanced after years of oversupply.
U.S. West Texas Intermediate (WTI) crude was at $50.93 per barrel at 0554 GMT, up 33 cents, or 0.7 percent, from their last settlement. Brent was at $56.55, up 30 cents, or 0.5 percent.
U.S. crude inventories dropped 2.7 million barrels in the week to Oct. 6, to 462.22 million barrels, the Energy Information Administration (EIA) said late on Thursday.
Crude production slipped 81,000 barrels per day (bpd) to 9.48 million bpd.
Strong Chinese oil imports, which averaged 8.5 million bpd between January and September and hit 9 million bpd in September, also supported prices, as China solidified itself as the world's biggest importer.
"Oil imports into China remained strong ... (with the) year-to-date growth rate at 12.2 percent. This should allay concerns of weak demand in China," ANZ bank said.
China's strong imports have been partly driven by strategic reserve purchases.
China has spent around $24 billion on building its crude reserves since 2015 and now holds around 850 million barrels of oil in inventory, according to the International Energy Agency (IEA).
Despite the tightening market, Bernstein Research said that OPEC would need to extend the cuts beyond the current expiry date in March 2018 to further reduce excess stocks.
"OPEC will not achieve normalized inventory levels before cuts expire at the end of March," Bernstein said, but added that "we believe an extension of cuts through 2018 should allow inventories to reach normalized levels before the end of 2018."
OPEC, together with other producers including Russia has been restraining output since January. The pact to cut production is set to expire by the end of March 2018, and there are discussions for an extension.
Traders said they were awaiting a decision later on Friday by U.S. President Donald Trump on whether to continue to certify the 2015 Iran nuclear deal.
Trump is expected not to certify the agreement, which has to be re-certified every 90 days and is due for renewal on Sunday.
The step would not withdraw the United States from the deal but would give the congress 60 days to decide whether to reimpose new sanctions.
"U.S. sanctions could cut off a lot of Iranian oil trade finance," FGE President Jeff Brown told Reuters this week.
"Last time we saw this, it cut off 1 million bpd of supplies. I don't think it'd be that big this time round, but it would still be significant," said Brown.