Oil settles higher on U.S. inventory drop, Russia gas cuts | Reuters

Oil settles higher on U.S. inventory drop, Russia gas cuts | Reuters

Oil settled up more than $2 on Wednesday as a report of lower inventories in the United States and cuts in Russian gas flows to Europe offset concern about weaker demand and a U.S. interest rate hike.

U.S. crude oil stockpiles dropped 4.5 million barrels last week as exports surged to an all-time high due to U.S. crude's big discount to international benchmark Brent, the Energy Information Administration said. read more

Brent crude rose $2.22, or 2.1%, to $106.62 a barrel. U.S. West Texas Intermediate (WTI) crude gained $2.28, or 2.4%, to $97.26.

After a sharp drop in the last two weeks, U.S. gasoline demand rebounded by 8.5% week on week, according to the data.

"All talk about demand destruction stopped in its tracks in this report...the situation has changed dramatically in two weeks," said Bob Yawger, director of energy futures at Mizuho.