U.S. West Texas Intermediate (WTI) crude futures were trading at $51.76 per barrel, down slightly from their last settlement, but still some 2 percent higher than last Friday, and nearly a quarter above mid-June levels. Prices on Tuesday added 1 cent to close at $51.88, the highest since September 27.
"There are no prizes for guessing the current buzzword in the energy complex".
Kirkuk, the main city in the region, produces around 10 percent of Iraq's total oil output and any (further) disruption could therefore have a significant impact on supply, said William OLoughlin, investment analyst at Rivkin Securities.
Oil market investors were also closely following developments in the Middle East, where tensions in northern Iraq were threatening to disrupt oil flows.
Asian shares advanced to a decade high on Monday, while US oil futures jumped to hover near a six-month top as escalating tensions between the Iraqi government and Kurdish forces threatened supply. But Iraq's oil minister, Jabbar al-Luaibi, told The Wall Street Journal on Tuesday that production from oil fields in Kirkuk was running normally.
The ongoing political friction between the USA and Iran also increased the global risk for oil.
The bank said there was further upside potential to its outlook.
"In terms of event risk the focus is on China with the Party Congress getting underway on Wednesday. and inflation data today", said Chris Weston, chief market strategist at IG Markets.
Jakob said Brent was unlikely to push above $60 a barrel because that level would encourage increased hedging from USA shale producers and less compliance among members of the Organization of the Petroleum Exporting Countries with their deal to curb output.
OPEC and other key producers made a decision to curb oil output by 1.8 million bpd from January this year to March next year. The deal was extended in May through March 2018 and participants have indicated in recent weeks they could potentially prolong the agreement through the end of next year.
The American Petroleum Institute (API), an industry trade group, will release USA weekly petroleum inventory data at 4:30 p.m. EDT (2030 GMT), ahead of the government's report on Wednesday. Data from the Energy Information Administration Wednesday is forecast to show a 3.25-MMbbl slide.
Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was up 0.82%, at $1.63 a gallon.
-Benoit Faucon contributed to this article.