Oil headed for its longest winning streak in two months after declines in U.S. crude production and gasoline inventories allayed some concerns that world markets will remain oversupplied.
Futures rose as much as 1.4 percent in New York to the highest in two weeks after advancing 5.2 percent in the previous five sessions.
U.S. production tumbled by 100,000 barrels a day last week, the biggest drop in almost a year, the Energy Information Administration said on Wednesday.
The decline was likely driven by field maintenance in Alaska and the impact of Tropical Storm Cindy.
Crude stockpiles unexpectedly expanded while gasoline inventories fell a second week.
Oil in New York and London tumbled into a bear market last week on concerns that rising global supply will counter output cuts from the Organization of Petroleum Exporting Countries and its partners. U.S. crude inventories remain more than 100 million barrels above the five-year seasonal average.
Price Futures Group senior market analyst in Chicago Phil Flynn said the drop in U.S. production “is the supportive part of the story”
He added: “People are kind of believing maybe it was overdone on the downside.”
West Texas Intermediate for August delivery was up 26 cents to $45 a barrel at 9:54 a.m. in New York.
Total volume traded was about 1 percent below the 100-day average.
Prices are down 6.2% this month.
Brent for August settlement, which expires Friday, gained 26 cents to $47.57 a barrel on the London-based ICE Futures Europe exchange.
The global benchmark traded at a premium of $2.56 to WTI.
U.S. crude output dropped to 9.25 million barrels a day last week, according to the EIA.
Crude stockpiles rose by 118,000 barrels to 509.2 million, the first increase in three weeks.
All 10 analysts surveyed by Bloomberg before the report had predicted inventories would decline.