Oil prices rose for a second day on Wednesday, at their highest, trading at six-week highs, on a surprise decline in U.S. crude inventories and as concern persisted over possible disruption to Middle East supply.
Unexpectedly large inventory declines in the United States helped underpin the market, even though refinery maintenance reached a peak this month. But with the hardening stance of the United States towards Iran, most investors were reluctant to sell oil aggressively.
Brent crude futures were up $1.42, or 2.1%, at $68.85 U.S. a barrel mid-morning Wednesday. The price has risen by about 11.5% since hitting a two-month low of $61.77 U.S. in early February.
U.S. West Texas Intermediate crude futures were up $1.16, or 1.8% at $64.70 U.S. a barrel.
Information released by the U.S. Energy Information Administration showed crude inventories fell by 2.6 million barrels in the last week as imports dropped. Analysts had expected an increase of 2.6 million barrels.
Elsewhere, gasoline stocks fell by 1.7 million barrels, compared with analysts' expectations in a poll for a two-million-barrel drop. EIA data also showed distillate stockpiles, which include diesel and heating oil, fell by two million barrels, versus expectations for a 1.7-million-barrel drop.
Analysts also pointed to the nomination of Mike Pompeo as new U.S. Secretary of State as a risk to oil markets, given that he fiercely opposed the Iranian nuclear deal as a member of Congress.
Should the United States reimpose sanctions against Iran, energy consultancy FGE said that would likely result in a 250,000 to 500,000 barrels per day (bpd) drop in its exports by year-end.
