Oil prices climb after API data shows surprise drop in U.S. stocks

Oil prices climbed on Wednesday after two sessions of losses as industry data showed an unexpected drop in U.S. crude and fuel stocks, offsetting concerns of a possible rise in supplies from Iran.

According to Reuters, Brent crude futures rose 41 cents, or 0.5%, to $91.19 a barrel by 0422 GMT, while U.S. West Texas Intermediate crude was at $89.74 a barrel, up 38 cents, or 0.4%.

“Undersupply is the key factor that has pumped up the oil price,” said Tina Teng, an analyst at CMC Markets.

U.S. crude, gasoline and distillate stocks fell last week, according to market sources citing American Petroleum Institute figures on Tuesday. Crude inventories fell 2 million barrels, according to API, versus analysts’ expectations of a 400,000-barrel increase.

Still, concerns about a possible Iran nuclear deal that could unleash more oil into global markets weighed on prices.

Brent and WTI slid about 2% on Tuesday, down for a second straight session, as Washington resumed indirect talks with Iran to revive a nuclear deal. Such a deal could lift U.S. sanctions on Iranian oil and quickly add supplies to the market, although a number of vital issues still need to be ironed out.

Oil prices at near $100 a barrel could also draw more production from the United States. The Energy Information Administration expects U.S. crude output to rise 770,000 barrels per day to 11.97 million bpd in 2022.

Meanwhile, governments from the United States to Japan are looking at ways to tackle high oil prices as inflation soars.

In Europe, concerns over Ukraine eased as French President Emmanuel Macron said he believed steps could be taken to de-escalate the crisis after a meeting with Russian President Vladimir Putin and called on all sides to stay calm.