A report by trade group American Petroleum Institute (API), released after prices settled, showed a higher-than-expected crude draw of 3.6 million barrels.

The US Energy Information Administration (EIA) will issue official inventory numbers on Wednesday.

Crude oil rallied in the past two sessions after rebels in Nigeria's Niger Delta vowed to halt output in the country, Africa's biggest producer until last year. The Nigerian government said it was initiating talks with the rebels.

"The market remains concerned about unscheduled supply interruptions with the latest coming from additional shut-ins in Nigeria," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

"With the industry projecting a decline in total U.S. crude oil stocks in this week's reports, the market bears are remaining on the sidelines."

US crude's West Texas Intermediate (WTI) futures settled up 67 cents, or 1.4%, at $50.36 a barrel. It was WTI's first settlement above $50 since July 2015. The session high was $50.53, a peak from October.

Brent crude futures settled up 89 cents, or 1.8%, at $51.44 a barrel. In post-settlement trade, Brent reached $51.54, a peak since October.

Both Brent and WTI have almost doubled in value since winter, when they hit their lowest since 2003.

Prices bounced off those lows on talk of an Opec production freeze, which did not materialise. The rally heightened after last month's wildfires in Canada's oil sands region and also has been supported by supply outages elsewhere, including Nigeria, Venezuela and Libya.

In its latest short-term energy outlook issued on Tuesday, the EIA said it expects US crude production declines for 2016 and 2017 to remain unchanged from a month ago.

Production will fall by 830,000 bpd this year to 8.6 million bpd, and drop next year by 410,000 bpd to 8.19 million bpd, the agency said.

The EIA also raised its 2016 US oil demand growth forecast