© Reuters. © Reuters.

Investing.com – A surprise dip in U.S. inventories has thrown crude oil a lifeline just as expectations for deeper output cuts by OPEC and its allies dimmed.

West Texas Intermediate, the benchmark for New York-traded crude futures, as well as London’s Brent, the global gauge for oil, settled Wednesday’s official U.S. session in oil up more than 1% each.

The rally came after the U.S. Energy Information Administration reported a 1.7-million-barrel drop for the week ended Oct.18, versus analysts’ expectations for a build of 2.2 million barrels.

rose $1.49, or 2.7%, to settle at $55.97 per barrel.

settled up $1.47, or 2.46%, at $61.17 per barrel.

Oil prices were pressured prior to the release of the EIA data, after Russian Energy Minister Alexander Novak said no formal proposals have been put forward to change the terms of a global deal on curbing oil supplies that was agreed between OPEC and its allies.

The rebound came as investors continued to see whopping declines in inventories of fuel such as diesel and gasoline over the past month as refiners made less of such products amid plant closures to meet new maritime fuel processing standards.

fell by 3.1 million barrels, compared with an expected drop of 2.27 million barrels. dropped by about 2.72 million barrels, versus forecasts for a decline of about 2.8 million barrels.

Refinery run rates picked up slightly to about 85% of capacity from the previous week’s 83%. But that was still way below industry norm of around 90% at least.

Investing.com analyst Barani Krishnan said the surprise draw in crude was also helped by a significant drop in crude imports. Despite being the world’s largest producer of light crude, the United States still buys significant volumes of heavy grade crude each week from Middle East and other producers.

“The reason for the draw is because imports fell by over 400,000 barrels to reach below 6 million for the first time in a while. It probably became obvious to many that you don’t need to import as much with current refinery run rates.”

And Krishnan added, exports ticked up to almost 3.7 million barrels a day,” Krishnan added.

U.S. oil production remained at 12.6 million barrels per day.

“The market’s focus, accordingly, is on the continuous slump in distillate and gasoline inventories that are busting expectations,” Krishnan said. “And, of course, talk of even more OPEC cuts despite Russia playing mind games as always with the market.”

Retail gasoline prices have slowly working their lower, which typically occurs in the fall. AAA’s Daily Fuel Gauge Report said the U.S. average was $2.628 a gallon, down 1.3% from Wednesday and 1% for the month. For the year, they’re up nearly 16%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.