NEW YORK, May 11 (Reuters) - Oil prices rose more than 1 percent on Thursday, as large drawdowns in US inventories and growing support for continued OPEC output cuts boosted confidence that a seemingly insurmountable glut might finally diminish.
Production rose, however, and gasoline demand over the last four weeks was 2.5 percent lower than at the same time period a year ago.
"It is hard to see how the day's gains last".
The global benchmark, Brent crude, fall to a five month low of $46.64 a barrel that put OPEC's effectiveness under doubt.
"We saw the biggest draw in (US) inventories for the year last week with stockpiles down more than 5 million barrels, and it looks like Opec's production cut is finally biting", said Greg McKenna, chief market strategist at brokerage AxiTrader.
"As a result, USA crude oil production surpassed 9 mb/d in February 2017, about 0.5 mb/d higher than the low seen in September 2016". USA light crude oil CLc1 was up 35 cents at $47.68.
BMI said that "continued output growth. particularly in the US" would cap price upside gains from the supply cuts, adding that it expected average 2017 prices of $57 a barrel for Brent and of $53.75 a barrel for WTI. Russian Federation and 10 other non-OPEC producers agreed to cut half as much.
Oil prices have erased the gains achieved since November, when OPEC and other producers, including Russian Federation, agreed to cut output by about 1.8 million barrels per day (bpd).
Also supporting prices were comments from Algeria's energy minister that Algeria and Iraq favor extending global supply cuts when OPEC meets this month. While the producers have largely complied with the production quotas, oil prices have struggled to gain momentum as USA shale producers have started to ramp up production in response to the OPEC-led cuts.
Global benchmark Brent crude, according to Reuters news agency, settled up $1.49 a barrel, or 3 per cent, to $50.22 a barrel.
An extension of the deal would push supply down even further in the second half of the year, the IEA's Neil Atkinson said at the Platts Crude Oil Summit in London on Wednesday.
Any more supply from OPEC or non-OPEC could return the market to surplus.
Iraq - OPEC's second-largest producer and a country that relies on oil revenues for almost 95 percent of its budget - committed to reduce daily production by 210,000 barrels to 4.351 million. Two OPEC members are exempt from the cut-Nigeria and Libya- and a third member, Iran, was allowed to boost output to a specified level.