Brent crude futures LCOc1, the international benchmark for oil prices, were trading at $56.94 per barrel at 0948 GMT, up 33 cents. Brent closed 2 percent higher the previous day.
“We have finally shifted fundamentally from build mode to draw mode,” Barclays said in a note. “For now, inventory draws will continue to leave room for a geopolitical risk premium to reemerge.”
Bullish forecasts from the International Monetary Fund late on Tuesday also supported prices. The IMF projected global economic growth of 3.6 percent this year and 3.7 percent for 2018, an indication that fuel demand would rise.
Additionally, Saudi Arabia, the world’s largest oil exporter, trimmed crude supplies to its biggest buyers in Asia, sources told Reuters, a sign that the kingdom will meet its supply restraint commitment in a pact led by the Organization of the Petroleum Exporting Countries.
The group, along with other producers including Russia, agreed to cut output by 1.8 million barrels per day (bpd) through March 2018 in an effort to balance the market.
Still, longer-term indications were less rosy. PVM’s Stephen Brennock noted that the IMF warned the economic recovery “is on thin ice”.
“Several market participants will have taken solace from yesterday’s rally but the jury is out on whether it has the legs to go the distance,” Brennock wrote.
The United States is not participating in the supply cut, and its output has risen 10 percent this year to more than 9.5 million bpd. C-OUT-T-EIA
Later on Wednesday, the American Petroleum Institute will release weekly U.S. fuel inventory data, followed by official figures from the U.S. Department of Energy on Thursday.