Oil prices raced nearly four percent higher on Wednesday as a fall in US crude and gasoline inventories re-ignited summer supply concerns in the world's biggest energy consumer.
US light crude jumped $1.33, or 3.8 percent to $36.30 a barrel, while London's Brent crude rose $1.20 t0 $32.55 a barrel.
Prices jumped after US government's Energy Information Administration said weekly crude stocks had fallen by 2.1 million barrels to 292.2 million barrels, breaking a six-week run of rises.
Gasoline stocks, the market's focus as summer holiday driving demand nears, slipped by 800,000 barrels to 200.1 million. A Reuters survey of 10 analysts had predicted both crude and gasoline stocks rose.
"The numbers look bullish," said Jim Ritterbusch, president of Ritterbusch and Associates in Chicago. "Draws in gasoline and crude countered expectations. As a consequence, this market will remain very sensitive to even a sniff of any refinery outages."
The draw on US crude inventories ended a run of stock builds which have lifted supplies by around 30 million barrels from 28-year lows struck barely two months ago.
The fuller stock cushion has helped push US crude prices down from a 13-year closing high above $38 struck last month. US oil prices so far this year have averaged more than $35.20 a barrel, up from last year's 20-year high of $31 as booming Chinese demand, and geopolitical insecurity spur heavy buying from speculative hedge funds.
Growing unrest in Iraq, where exports have only just returned to pre-war levels following months of delays from sabotage, also underpinned the renewed price strength.
"Iraqi oil output has been taken beyond sustainable levels and will slip back, and the risks of more serious outcomes appear to be growing," said Barclays Capital in a report.
"The potential risk of some stark headline about Iraq causing a sharp price spike will make it somewhat more difficult for traders to risk taking and maintaining too aggressive a short position in coming weeks," Barclays Capital added.
Opec oil producers last week endorsed a production cut of one million barrels per day from April 1, or four percent, to ward off the impact of a seasonal downturn in demand in the second quarter.
The group agreed to the cut in mid-February, when it also pledged to eliminate overproduction. So far the group appears to be leaking supplies above the agreed official level of 23.5 million barrels per day.
A Reuters survey of the Opec producers' April oil export programmes indicated the cartel would deliver no more than one-third of the planned one million bpd cut. Many members admitted last week that new quotas would not be met until May.
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