Brent crude futures rose 46 cents to $65.18 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 53 cents to $58.58 a barrel.
U.S. crude inventories fell by 8.5 million barrels in the week ended July 26, the Energy Information Administration said on Wednesday. Analysts expected a decrease of 2.6 million barrels.
“The report was bullish due to the large crude oil inventory drawdown and strong demand from refiners and drivers,” said John Kilduff, partner at Again Capital Management. “Refiners are running at very high rates, and gasoline demand remains quite high, as the summer driving season persists.”
Libya’s Sharara oilfield, the country’s largest, shut after a problem on Tuesday with a valve on the pipeline linking it to the Zawiya oil terminal. State-owned National Oil Corp (NOC) declared force majeure on loadings of the crude grade on Wednesday.
Saudi Arabia’s oil production fell to 9.6 million barrels per day in July and will stay below 10 million bpd in the coming months, a Saudi oil source told Reuters.
Backwardation in Brent, a market structure in which later-dated contracts trade at lower levels than near-term contracts, has to a large extent evaporated, signaling a well-supplied market despite OPEC-led output cuts and U.S. sanctions on oil producers Iran and Venezuela.
In Shanghai, U.S.-China trade talks are taking place in an effort to end a year-long trade war. Negotiators wrapped up a brief round of trade talks on Wednesday that both sides described as “constructive.”
A Reuters monthly poll showed oil prices are expected to be range-bound near current levels this year as slowing economic growth and a protracted trade dispute curb demand.