Oil prices rebounded on Wednesday to settle 1.71 percent higher, with U.S. crude snapping a five-day decline, after another weekly inventory draw but gains were still limited by a huge supply overhang and concerns about a strong dollar.
U.S. crude stocks fell by nearly 2.7 million barrels last week, down for a third consecutive week, as refineries hiked output, the government-run Energy Information Administration said. Gasoline and distillate inventories also declined.
While the crude draw was nearly triple that estimated by analysts in a Reuters survey, it was only about half of the 5.2 million-barrel drop reported by industry group American Petroleum Institute, disappointing some market bulls.
"It's a fairly neutral report at the best as the weekly change is mildly bullish within a bearish overall stock situation," said James L. Williams, energy economist at WTRG Economics in London, Arkansas.
He noted that stockpiles were in "excellent shape" with crude inventories about 90 million barrels above year-ago levels, while refinery utilization rates were only a little higher at above 92 percent.
The dollar extended its gains for a third straight session, hitting two-week highs. A stronger dollar makes commodities priced in the greenback, including oil, less affordable for holders of other currencies.