Oil prices edged higher on Wednesday, extending gains from the previous day as a bigger-than-expected drop in US crude stockpiles signalled strong demand, while investors remained cautious about the Iran-Israel ceasefire and stability in the Middle East.

Brent crude futures rose 15 cents, or 0.2%, to $67.83 a barrel by 0330 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.3%, to $65.12 a barrel.

Both benchmarks rose nearly 1% on Wednesday, recovering from losses earlier in the week after data showed strong U.S. demand.

"Some buyers are liking the strong demand shown by the weekly U.S. inventory draw," said Yuki Takashima, an economist at Nomura Securities.

"However, investors remain nervous, seeking clarity on the status of the Iran-Israel ceasefire," he said, adding that market attention is now turning to OPEC+ production levels. Takashima said WTI is likely to return to the $60-$65 range, its pre-conflict levels.

ANZ analysts said that with the Iran-Israel conflict easing, market focus has returned to fundamentals, and pointed to data showing US crude oil inventories fell for a fifth straight week.

"US government data suggests the US driving season is getting underway after a slow start," ANZ analysts said in a note. US crude and fuel inventories fell in the week to June 20 as refining activity and demand improved, the Energy Information Administration (EIA) said on Wednesday.

Crude inventories fell by 5.8 million barrels, the EIA said, beating analysts' expectations in a Reuters poll for a draw of 797,000 barrels. Gasoline stocks unexpectedly fell by 2.1 million barrels, compared with forecasts for a build of 381,000 barrels as gasoline supplies, a proxy for demand, rose to their highest since December 2021.

On Saturday, Igor Sechin, head of Russia's largest oil producer Rosneft (ROSN.MM), opened a new tab , said OPEC+, which brings together the Organization of the Petroleum Exporting Countries and allies including Russia, could accelerate its output increases by about a year from its original plan.

Meanwhile, U.S. President Donald Trump hailed the swift end to the war between Iran and Israel and said Washington would likely seek a commitment from Tehran to end its nuclear ambitions at talks with Iranian officials next week.

Trump also said on Wednesday that the U.S. had not yet given up its maximum pressure on Iran — including curbs on Iranian oil sales — but hinted at a potential easing in enforcement to help the country rebuild. (alg)

Source: Reuters