190306 crude carrier
A crude carrier on the island of Curacao. Image Credit: Reuters

Melbourne: Oil prices rose in early trade on Wednesday after industry data showed a surprise drop in US crude stockpiles, suggesting demand is holding up despite steep interest rate hikes dampening global growth.

Brent crude futures picked up 17 cents, or 0.1 per cent, to $94.82 a barrel at 0014 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose 26 cents, or 0.3 per cent, to $88.63 a barrel.

Both benchmark contracts rose about 2 per cent in the previous session on a weaker US dollar and after an unverified note trending on social media said the Chinese government was going to consider ways to relax COVID-19 rules from March 2023.

In a further positive sign for demand, data on Tuesday from the American Petroleum Institute showed crude stocks fell by about 6.5 million barrels for the week ended October 28, according to market sources.

Eight analysts polled by Reuters had on average expected crude inventories to rise by 400,000 barrels.

At the same time, gasoline inventories fell more than expected, with stockpiles down by 2.6 million barrels compared with analysts' forecasts for a drawdown of 1.4 million barrels.

China's zero-COVID policy has been a key factor in keeping a lid on oil prices as repeated lockdowns have slowed growth and pared oil demand in the world's second largest economy.

"Potential changes to China's COVID-19 policy could have significant implications for oil demand," ANZ Research analysts said in a note.