WASHINGTON (dpa-AFX) - Oil rebounded from steep overnight losses on Wednesday after industry data pointed to a sizable drop in U.S. crude stockpiles.
The dollar's weakness and simmering tensions in the Middle East also offered some support and offset concerns about China's economic recovery.
Benchmark Brent crude futures climbed 0.6 percent to $81.17 a barrel, while WTI crude futures were up 0.6 percent at $78.81.
Prices were given a lift after the American Petroleum Institute (API) reported a decrease in crude stockpiles of 5.21 million barrels in the week ended Aug. 9, a much larger drop versus expectations for 2 million barrels.
The API report also revealed a 3.69 million drop in gasoline inventories while distillates rose by 612,000 barrels.
Official government data from the Energy Information Administration is due later in the day.
Meanwhile, Tropical Storm Ernesto is forecasted to strengthen into a dangerous hurricane, moving north of the Greater Antilles.
The dollar index held steady near a four-month low ahead of the U.S. CPI report due later in the day that could allow the Federal Reserve to ease policy in September.
On the geopolitical front, Vladimir Putin's 'generous' offer is no longer on the table after Ukraine's invasion of Russia's Kursk region, a Kremlin official has reportedly said.
Elsewhere, the Biden administration has approved a $20 billion weapons sale to Israel despite activists' opposition due to Gaza's casualties.
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