Oil futures held onto previous gains after a report said U.S. oil inventories fell more than expected last week.
Light, sweet crude for August delivery traded up $1.03, or 1.1%, to $98.53 U.S. a barrel on the New York Mercantile Exchange. September Brent crude on ICE Futures Europe exchange rose $1.22, or 1%, to $118.28 U.S. a barrel.
Trade of the August contract was thin, with the contract set to expire at the close of trading Wednesday. The more active September contract recently traded up $1.04, or 1.1%, to $98.88 U.S. barrel on the Nymex.
Futures remained in positive territory, little changed from earlier levels, after the Department of Energy said oil inventories last week fell 3.7 million barrels. Although the draw was bigger than expected, it was offset somewhat by increases in refined-product inventories.
The DOE said gasoline inventories rose 800,000 barrels last week, while stocks of distillates, including heating oil and diesel, jumped 3.4 million barrels.
Analysts expected oil inventories last week to fall 1.4 million barrels, according to a survey by Dow Jones Newswires. Gasoline stocks were seen falling 200,000 barrels, while distillate stocks were seen rising 1.2 million barrels.
Traders look to the weekly inventory report for clues on U.S. supply and demand levels. Although a drop in crude futures typically lifts prices because it signals strong demand from refiners, an opposite change in product inventories can blunt the market's response.
