- U.S. West Texas Intermediate futures rocketed above $47 a barrel after government data showed a big drop in the U.S. crude inventories.
- Gasoline demand also recovered from a recent weak spell, driving up U.S. gasoline futures.
- WTI is on track for its best day since OPEC agreed to cut its output.
Oil prices surged as much as 4 percent after the latest report on U.S. crude stockpiles eased fears that have permeated the market in recent weeks, helping to drag prices to nearly six-month lows.
U.S. West Texas Intermediate futures rocketed back above $47 a barrel and international benchmark topped $50 after the Energy Information Administration reported a much larger drop in the nation's crude stockpiles and a strong rebound in gasoline demand.
WTI posted its best performance since Dec. 1, one day after the Organization of the Petroleum Exporting Countries agreed to cut their production to reduce brimming global crude stockpiles.
That marked a sharp reversal from the recent trend, which has seen oil prices crash through a number of technical levels to fall as low as $43.76.
Oil prices had already been trading higher on a report that Saudi Arabia was cutting exports to the key Asian market and on earlier industry data pointing to a sharp decline in weekly U.S. inventories.
"The EIA numbers came in bullish across the board," Roberto Friedlander, head of energy trading at Seaport Global Securities said in a research note.
U.S. commercial crude inventories fell by 5.2 million barrels, versus estimates for a 1.8 million barrel decline. This occurred as refinery activity eased from recent elevated levels and oil imports dropped by 644,000 barrels a day.
Gasoline demand rose by 252,000 barrels a day, bringing the four-week average closer to levels at this time last year after a string of data showing weekly consumption declines. While gasoline in storage did not decline as much as analysts anticipated, it did not rise as indicated in the earlier industry report.
U.S. gasoline futures, which have slumped about 12.5 percent over the past 4 weeks, were up 3.3 percent on Wednesday.
Stockpiles of distillates, which include diesel and home heating fuel, fell more sharply than expected, as well.
"Crude prices continue to be sensitive to headlines surrounding U.S. production growth and OPEC output cuts, despite the fact the market largely expects those dynamics to persist," Jenna Delaney, senior oil analyst at Platts Analytics said in a written briefing on the EIA numbers.
"Going forward, the question will be whether these factors will result in draws in global inventories during the remainder of 2017, which are most visibly seen through U.S. inventory data."