Oil prices gain as U.S. crude stockpiles continue to shrink

Oil prices gained on Wednesday in Asia as data showed U.S. crude inventories continued to shrink.

U.S. Crude Oil WTI Futures were up 2% at $58.96. International Brent Oil Futures gained 1.4% to $65.2.

The gains came after the American Petroleum Institute (API) reported a fall in U.S. crude inventories.

U.S. crude stockpiles fell by 7.5 million barrels in the week ended June 21 to 474.5 million, more than the expectations of a decline of 2.5 million barrels, according to API. Crude stocks at U.S. delivery hub Cushing, Oklahoma, fell by 1.3 million barrels.

“Oil prices went ballistic after the API report,” said Stephen Innes, managing partner at Vanguard Markets, in a Reuters report.

“Oil prices have been squeezing higher on escalating tensions in the Middle East. But with late-day draws showing up in the API report, this is a strong signal for the energy market,” Innes said.

Traders expect weekly data from the U.S. Energy Information Administration, due later in the day, will show a 2.5-million-barrel drop in crude stockpiles, almost matching the last decline of 3.1 million barrels.

Meanwhile, Kremlin spokesman Dmitry Peskov said on Tuesday that Russian President Vladimir Putin will meet Saudi Crown Prince Mohammed Bin Salman at the G-20 summit this weekend.

It is expected the two will discuss whether and how to extend the current production cut agreement between the Organization of the Petroleum Exporting Countries (OPEC) and other producers.

OPEC and its allies will discuss the output policy for the rest of the year at a meeting next week.