Refinery workers walk inside the LyondellBasell oil refinery in Houston, Texas. Image Credit: Reuters

New York: Oil jumped the most in a week as an industry report showing a continued drawdown in US crude inventories added to concerns over a supply outlook that’s being threatened by rising tension in the Middle East.

Futures in New York rose as much as 1.6 per cent after closing up 0.3 per cent Tuesday.

The American Petroleum Institute reported nationwide stockpiles fell by 8.13 million barrels last week, according to people familiar with the data. That’s more than the median estimate for a 2.9 million barrel drop in a Bloomberg survey before Energy Information Administration figures due Wednesday.

After plunging almost 5 per cent last Tuesday, crude has clawed back most of those losses as Britain’s seizure of a tanker carrying Iranian crude and the risk of retaliation by the Islamic Republic kept investors wary. A resumption of US-China negotiations is providing some hope the trade war can be contained, while Federal Reserve Chairman Jerome Powell’s two-day testimony to Congress that starts Wednesday will be watched closely for clues on rate cuts.

“The declining American inventories and Iran’s warmongering rhetoric pave the road further for bulls to make a comeback,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “But it promises to be a bumpy road ahead as there’s still a lot of concern about declining energy demand.”

West Texas Intermediate crude for August delivery gained 85 cents, or 1.5 per cent, to $58.68 a barrel on the New York Mercantile Exchange as of 9.48am in Singapore after rising as much as 92 cents earlier. The contract has rallied 4.3 per cent since last Tuesday’s close.

Brent for September settlement increased 67 cents, or 1 per cent, to $64.83 a barrel on the ICE Futures Europe Exchange. The contract closed 0.1 per cent higher on Tuesday. The global benchmark crude traded at a $6.05 premium to WTI for the same month.