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London - Oil prices edged towards $50 a barrel on Wednesday after hitting the highest levels this year on a larger-than-expected drop in US stockpiles as wildfires disrupt Canadian crude output.
US benchmark West Texas Intermediate (WTI) struck a 7.5-month peak at $49.45 a barrel after the American Petroleum Institute on Tuesday reported that US crude inventories last week dropped by 5.14 million barrels.
US government data from the Energy Information Administration (EIA) due later on Wednesday are likely to confirm the fall in supplies, with Canada the biggest supplier of crude to the US market.
Around 1030 GMT, WTI for delivery in July stood at $49.13 a barrel, up 51 cents compared with Tuesday's close.
Brent North Sea crude oil for July won 59c to $49.20 a barrel.
The global oil market had nosedived from above $100 in mid-2014 to 13-year lows of around $27 in February, plagued by a stubborn supply glut.
They have since rebounded, aided by the Canada wildfires and unrest in oil producer Nigeria.
All eyes were now on the EIA's weekly inventories report.
"An inventory reduction... would trigger a test of the $50 mark, especially if there were any further decline in US oil production," said Commerzbank analyst Carsten Fritsch.
"Having said that, the higher price level makes shale oil production lucrative again in many places, which could dampen the fall in production in the coming months.
"What is more, oil production is gradually resuming in those regions of Canada plagued by wildfires, which means the supply situation is likely to ease again in the coming weeks. We therefore do not expect to see prices remain above $50 per barrel for any length of time," he added in a research note.
