WASHINGTON (dpa-AFX) - Oil prices rose sharply on Wednesday as data showed a much larger than expected drop in U.S. crude inventories in the week ended August 2nd.
Fears about a recession faded after Fed officials reassured investors that the U.S. is not headed for a recession.
The market also reacted to the Bank of Japan's comments that the bank won't hike interest rates when financial markets are volatile.
West Texas Intermediate Crude oil futures for September ended up $2.03 or about 2.75% at $75.23 a barrel.
Brent crude futures were up $1.84 or about 2.41% at $78.32 a barrel a little while ago.
Data from the Energy Information Administration (EIA) showed crude oil inventories in the U.S. tumbled by 3.7 million barrels last week, after slumping by 3.4 million barrels in the previous week. Crude inventories were forecast to edge down by 0.4 million barrels.
At 429.3 million barrels, U.S. crude oil inventories are about 6 percent below the five year average for this time of year, the EIA said.
The data said gasoline inventories increased by 1.3 million barrels last week but remain about 2% below the five-year average for this time of year.
Distillate fuel inventories, which include heating oil and diesel, also rose by 0.9 million barrels last week but are about 6% below the five-year average for this time of year, the EIA data said.
Oil also found support due to an escalation in tensions in the Middle East. Traders braced for a possible new wave of attacks by Iran and its allies following last week's killing of senior members of fighter groups Hamas and Hezbollah.
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