NEW YORK - U.S. oil futures rose more than $1 a barrel on Wednesday, bolstered by a fifth weekly crude inventory drawdown and strong domestic gasoline demand, amid ongoing supply concerns over U.S. sanctions on Iran that come into force in November.
U.S. crude futures were up $1.08 at $70.93 a barrel by 11:15 a.m. [1515 GMT], after the U.S. Energy Information Administration said crude and gasoline stockpiles fell last week.
Crude inventories fell 2.1 million barrels last week to 394.1 million barrels, the lowest level since February 2015, EIA data showed. Gasoline stocks fell 1.7 million barrels versus forecasts for a 100,000-barrel drop.
"It was a squarely bullish report," said John Kilduff, a partner at Again Capital Management in New York. "The summer-like demand from drivers is proving unrelenting."
Gasoline consumption usually picks up in the summer and wanes in autumn, but demand remained strong in the latest week, estimated at 9.5 million barrels per day.
Brent futures gained 36 cents a barrel to $79.39. On Tuesday, the global oil benchmark rose 1.3 percent on a media report that Saudi Arabia, the world's largest oil exporter, was comfortable with prices above $80, indicating the producer would not try to increase output to drive prices lower.
Reuters reported on Sept. 5 that Saudi Arabia wanted oil to stay between $70 and $80 to keep a balance between maximising revenue and keeping a lid on prices until U.S. congressional elections.
The focus on oil supply has been reflected in the options market this week, where investors have scooped up large amounts of buy or call options, suggesting they see prices rising.
Data from the InterContinental Exchange showed open interest in calls that give the owner the right to buy Brent futures at $80 and $85 by next week grew by nearly 45 percent on Monday and Tuesday to an equivalent of 54 million barrels of oil.
The Organization of the Petroleum Exporting Countries and other producers including Russia meet on Sept. 23 in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply.
U.S. sanctions affecting Iran's oil exports come into force on Nov. 4 and many buyers have already scaled back Iranian purchases. But it is unclear how easily other producers can compensate for any lost supply.