Oil prices rose on Wednesday as a reported drop in U.S. crude inventories increased concerns about tight global supplies amid the hit to Russian exports from economic sanctions.
Brent crude futures climbed $1.77, or 1.53%, to $117.25 a barrel at 0443 GMT, after falling 14 cents in the previous session.
U.S. West Texas Intermediate (WTI) crude futures rose $1.51, or 1.38%, to $110.78 a barrel, after losing 36 cents on Tuesday.
The market remains on edge over the prospect of further sanctions on Russia, the world's second-largest crude exporter, after its invasion of Ukraine, actions that Moscow calls a "special operation."
Prices dipped on Tuesday as the European Union seems unlikely to agree to a ban on Russian oil. However, U.S. President Joe Biden is set to announce more sanctions on Russia when he meets with European leaders on Thursday in Brussels, including an emergency meeting of NATO.
"We expect continued high volatility through the rest of the week, and especially around Thursday’s NATO summit," said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Hari added that there may be some relief for the market if the EU drops the idea of a ban on Russian oil imports.
"But supply worries will remain elevated as long as the Russia-Ukraine peace talks remain deadlocked," she said.
The latest data from the American Petroleum Institute industry group showed crude stocks in the U.S., the world's biggest oil consumer, fell by 4.3 million barrels for the week ended March 18, according to market sources, counter to analysts' forecasts for an increase.
Nine analysts polled by Reuters on average had estimated crude inventories rose by 100,000 barrels in the week to March 18.
"The U.S. and Saudi Arabia are the two nations that can meaningfully offset the loss of Russia's oil. Extra supply from either seems unlikely right now but we are in a highly unusual situation and that makes everything more fluid," Commonwealth Bank analysts said in a note.
Official U.S. inventory data is due from the Energy Information Administration on Wednesday.
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