US oil futures surged nearly 2 percent on Wednesday as they were bolstered by a fifth weekly crude inventory drawdown and strong domestic gasoline demand amid ongoing global supply concerns over US sanctions on Iran that come into force in November.
US crude inventories fell 2.1 million barrels last week to 394.1 million barrels, the lowest level since February 2015, government data showed. Gasoline stocks fell 1.7 million barrels versus forecasts for a 100,000-barrel drop. "It was a squarely bullish report," said John Kilduff, a partner at Again Capital Management in New York. "The summer-like demand from drivers is proving unrelenting."
Gasoline consumption usually picks up in the summer and wanes in autumn, but demand remained strong in the latest week, estimated at 9.5 million barrels per day.
US crude futures settled up $1.27, or 1.8 percent, at $71.12 a barrel.
Brent futures also rose but the gains were more muted, as the global benchmark ended 37 cents, or 0.5 percent, higher at $79.40 a barrel.
In the previous session, Brent rose 1.3 percent on a media report that Saudi Arabia, the world's largest oil exporter, was comfortable with prices above $80, indicating the producer would not try to increase output to drive prices lower.
Reuters reported on September 5 that Saudi Arabia wanted oil to stay between $70 and $80 to keep a balance between maximising revenue and keeping a lid on prices until US congressional elections.
The Organization of the Petroleum Exporting Countries and other producers including Russia meet on September 23 in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply.
US sanctions affecting Iran's oil exports come into force on November 4 and many buyers have already scaled back Iranian purchases. But it is unclear how easily other producers can compensate for any lost supply.