Investing.com - Oil prices were sharply higher in North American trading on Wednesday, hitting the strongest levels of the session after data showed a sizable drop in U.S. crude stockpiles.
The U.S. West Texas Intermediate crude June contract jumped $1.04, or around 2.3%, to $46.97 a barrel by 10:35AM ET (14:35GMT). Prices were at around $46.62 prior to the release of the inventory data.
The U.S. benchmark lost 55 cents on Tuesday amid fears that an ongoing rebound in U.S. shale production is derailing efforts by other major producers to rebalance global oil supply and demand.
Elsewhere, Brent oil for July delivery on the ICE Futures Exchange in London rose $1.07 to $49.77 a barrel. The global benchmark declined 61 cents a day earlier.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 5.2 million barrels in the week ended May 5.
Market analysts' expected a crude-stock decline of around 1.8 million barrels, while the American Petroleum Institute late Tuesday reported a supply-drop of 5.8 million barrels.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 438,000 barrels last week, the EIA said.
Total U.S. crude oil inventories stood at 522.5 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.
The report also showed that gasoline inventories declined by 150,000 barrels, compared to expectations for a fall of 538,000 barrels.
For distillate inventories including diesel, the EIA reported a decline of 1.6 million barrels.
Crude has been under pressure in recent weeks, rattled by concern over increasing U.S. crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.
OPEC and non-member oil producers are considering extending a global supply cut for nine months or more to give the market more time to rebalance, OPEC and industry sources said on Monday.
In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels.
A final decision on whether or not to extend the deal beyond June will be taken by the oil cartel on May 25.
Elsewhere on Nymex, gasoline futures for June rose 3.1 cents, or nearly 2.2%, to $1.517 a gallon, while June heating oil added 2.7 cents to $1.469 a gallon.
Natural gas futures for June delivery gained 3.8 cents to $3.265 per million British thermal units.