US crude tops $68 for the first time in more than three years
U.S. West Texas Intermediate crude futures ended Wednesday's session up $1.95, or 2.9 percent at $68.47, the best settle since Dec. 1, 2014. The contract hit an intraday high going back to Dec. 2, 2014.
Brent crude oil futures rose $1.78, or 2.5 percent, to $73.36 a barrel by 2:20 p.m. ET. It earlier hit a new intraday high going back to November 2014.
U.S. commercial crude inventories dropped by 1.1 million barrels in the week through April 13, the U.S. Energy Information Administration reported.
Stockpiles of gasoline also dropped by 3 million barrels, while distillates fuels including diesel declined by 3.1 million barrels.
"It's a bullish report with the across-the-board drawdowns in everything," said John Kilduff, founding partner at energy hedge fund Again Capital.
"There was really strong demand for gasoline, summer-like demand for gasoline," he said.
Gasoline demand was nearly 9.9 million barrels a day.
Crude futures were already higher ahead of the release after a report from the American Petroleum Institute on Tuesday afternoon previewed the drop in stockpiles.
At current levels, futures are approaching levels not seen since Thanksgiving of 2014, when OPEC refused to take steps to stop a decline in oil prices, sparking an even sharper drop.
OPEC has since reversed course, reaching a deal with Russia and other oil producers to cut output by 1.8 million barrels a day starting in January 2017.
Some senior Saudi officials are reportedly targeting $80 per barrel oil, and could argue for keeping the production caps in place to achieve that goal.
A rally in recent weeks has been fueled by concerns over geopolitical tension in the Middle East and potential disruptions to oil supply.
An air strike on Syria by the United States, France and the UK stoked fears of conflict with Syrian government allies Russia and Iran, two of the world's biggest oil producers. Rocket attacks by rebels in Yemen on top oil exporter Saudi Arabia have also contributed to oil's geopolitical risk premium.
The market is also waiting to see whether President Donald Trump will reimpose sanctions on Iran as a May 12 deadline approaches.
Meanwhile, production continues to decline in Venezuela, where economic crisis has paralyzed the nation's lifeblood oil industry.
— CNBC's Patti Domm contributed to this story.