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Crude oil futures were on the backfoot early on Tuesday as reports of increased Libyan production continued to filtre through to trading floors.

The American Petroleum Institute said U.S. crude oil inventories fell by 1.8 million barrels last week.

The price for Brent crude oil was up 0.6 percent about a half hour before the start of trading in NY to $53.43 per barrel. Commentators at Vienna-based JBC Energy said their assessment of Opec's crude production in March is showing that compliance with the cartel's pledge to cut production has moved higher to 90%.

Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to OPEC's Secretary-General Mohammad Barkindo. Total volume traded was about 35 per cent below the 100-day average.

The oil market is back in contango, now at $0.64 per barrel.

Still, a rise in output in the United States - prompted in part by higher prices resulting from the OPEC-led cut - is likely to provide headwind for prices, analysts said.

In the midst of these production cuts, Libya is seeing its own output surge after the country's biggest oil field resumed production at its biggest oil field.

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The field was producing around 120,000 barrels per day (bpd) on Monday and about 220,000 bpd prior to the March 27 shutdown.

"Yesterday's API report gave the market a bullish head-fake via three chunky draws, hence a build to crude stocks and minor draws to the products is causing a tempering of bullish optimism", said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.

Production at both Russian majors Lukoil and Surgutneftegaz dipped by 0.9 percent last month, while output at Rosneft, the world's largest traded oil producer, edged up by 0.1 percent from February.

U.S. West Texas Intermediate crude CLc1, meanwhile, gained 79 cents, or 1.6 percent, to settle at $51.03 per barrel.

He did not mention, however, that Iraq has also vowed to boost oil production capacity to 5 million bpd before the end of this year and increase its reserves by 15 billion barrels in 2018, to reach 178 billion barrels.

Oil's climb last week, its most since December, was also aided after Kuwait and other producers from the Organisation of Petroleum Exporting Countries joined with Oman to voice support for an extension of the six-month deal to reduce output that began in January.

The Organization of the Petroleum Exporting Countries (OPEC), and non-OPEC members including Russian Federation, had agreed late previous year to cut output by nearly 1.8 million barrels per day (bpd) in the first half of 2017.