Oil prices have increased above $50 a barrel after a report by the American Petroleum Institute (API) highlighted a fall in US crude inventories.

Brent crude rose 33 cents at $50.95 a barrel, while the US crude increased 46 cents to $50.31, Reuters reported.

Data released by API showed a decline in US crude inventories by 5.2 million barrels.

"There is a risk that the DoE will not show a stock draw of the same magnitude."

The drop in inventories, if confirmed by the Department of Energy figures, will add to signs that a supply glut is easing.

Petromatrix oil analyst Olivier Jakob told the news agency: "What we have is basically the leftovers of the reaction from the API report.

"There is a risk that the DoE will not show a stock draw of the same magnitude."

Oil prices also gained support from a boost in risk appetite in worldwide markets after investors became more optimistic about the UK voting to remain vote in the EU in Thursday’s referendum.

The dollar fell against a basket of currencies making it cheaper for other currency holders to buy dollar-denominated commodities.