Oil prices climb over $2 as US crude stocks fall

Oil prices rose by more than $2 a barrel in early trading on Wednesday, supported by a drop in US crude inventories, partially recovering losses from the previous session that were caused by a pause in hostilities between Washington and Tehran.

Brent crude futures gained $2.71, or 3.2 percent, to reach $86.80 a barrel as of 0002 GMT, while US West Texas Intermediate crude rose $2.26, or 3.4 percent, to $81.95 a barrel.

Market sources on Tuesday, citing data from the American Petroleum Institute, said US crude inventories fell by about 3.3 million barrels in the week ending July 24.

Meanwhile, gasoline stocks rose by 918,000 barrels, and distillate inventories increased by 355,000 barrels compared to the previous week, according to the sources.

Official inventory data from the US Energy Information Administration is expected later on Wednesday.

OPEC and its allies in the OPEC+ group also provided additional support to prices, as sources told Reuters the alliance is likely to halt oil production increases for three months starting in October, after completing the return of volumes following voluntary cuts.