Oil settled near its highest close since January, as traders track supply constraints and a US industrial report indicated another drop in crude oil inventories at the country's main storage hub.
WTI was trading above $81 a barrel after rising 2.2% on Tuesday. Shipments from Russia fell after Moscow pledged to cut production, according to tanker tracking data. In the Middle East, crude oil flows from the Kurdistan Region of Iraq to Turkey remain virtually halted.
The industry-funded American Petroleum Institute reported that crude oil holdings in Cushing, Oklahoma, shrank by 1.4 million barrels last week, according to people familiar with the data. If the government figures are confirmed later on Wednesday, it would be the sixth consecutive decline.
Crude oil rebounded from a 15-month low in March, after the Organization of the Petroleum Exporting Countries (OPEC) and its allies cut production, US crude inventories fell, and traders stuck to the view that Chinese demand would pick up. Tuesday's gains came ahead of US consumer price data which will shape investors' expectations about the Fed's next move and risk appetite.
Warren Patterson, head of commodity strategy at ING Groep NV in Singapore, said: “Oil remains relatively supported on expectations that market supplies will decline after the OPEC+ cuts. However, in the near term, all attention will likely be on today's US CPI data. Obviously, any surprises to the upside could be negative for investment-risk assets.
Key time differentials indicate that the oil market is narrowing. The spot spread for West Texas Intermediate crude, the difference between its two nearest contracts, reached 6 cents per barrel, reflecting the case of the backorder. This is the widest spread this year on a closing basis.
