Investing.com - Oil prices held onto strong gains after government data confirmed that U.S. crude inventories plunged last week.
The Energy Information Administration said in its regular weekly report that crude oil inventories plummeted by 10.03 million barrels in the week to August 23.
That was compared to forecasts for a stockpile draw of 2.11 million barrels after a decrease of 2.7 million barrels in the previous week.
The EIA report also showed that gasoline inventories dropped by 2.09 million barrels, compared to expectations for a draw of just 0.39 million barrels, while distillate stockpiles unexpectedly fell by 2.06 million barrels, compared to forecasts for a gain of 0.92 million.
U.S. crude prices surged 2.8% to $56.44 a barrel by 10:40 AM ET (14:40 GMT), slightly off $56.50, seen prior to the publication.
London-traded Brent crude futures jumped 2.1% to $60.27 a barrel, unchanged from levels seen ahead of the release.
U.S. crude had been trading higher ahead of the report, as Tuesday’s release by industry group American Petroleum Institute showed an even larger 11.1 million barrel plunge in U.S. crude stockpiles.
Also supporting oil prices on Wednesday, Iran's President Hassan Rouhani ramped up tensions with Washington, calling in a televised speech for unity in order to overcome what he described as an "economic war" imposed on his country by the U.S.
U.S. economic sanctions against Tehran have reduced Iranian oil exports, adding to OPEC-led efforts against the global supply glut.
Crude has seen a strong run so far this week, up nearly 4%, as the Joint Ministerial Monitoring Committee reported that compliance in the pact between OPEC and its allies to cut production jumped to 159% in July from the prior 137%.
But WTI oil is still down 15% since the April highs as the ongoing trade conflict between the U.S. and China provoke fears of exacerbating a global slowdown that will stifle demand for oil.
Markets are prepping for a new wave of tariffs on Sunday. The U.S. Trade Representative's office on Wednesday officially reaffirmed President Donald Trump's plans to add an additional 5% tariff on some of the goods in a $300 billion list of Chinese imports on Sept. 1, ahead of a second wave on Dec. 15.
Beijing will also move forward with retaliatory tariffs on Sunday.