US crude oil inventories dropped sharply last week, data from the US Energy Information Administration shows
US crude inventories dropped by 4.2m barrels in the week ending 20 May, a much bigger loss than was previously expected.
Traders had been gearing up for a drop of around 1.7m barrels.
Oil has been trading up all day, with US crude hitting a seven-month high overnight, and global benchmark Brent up 0.89 per cent at $49.50 this afternoon.
The commodity got a kickstart yesterday when data from the American Petroleum Institute revealed inventories had reduced by 5.14m barrels. This was much larger than the 2m expected, and was the largest draw on stockpiles since December last year.
Experts have pointed to the recent wildfires in Canada as a factor in the reduced inventories, while analyst Malcolm Graham-Wood said strikes at French refineries "may lead to shortages and ultimately good excuses for higher prices".
The decline in US inventories comes as Mohammed bin Saleh al-Sada, leader of the Organisation of Petroleum Exporting Countries, warned that the world "badly" needs $65 oil to avoid further price shocks.