Oil jumps to session highs after bullish weekly stockpile data

Oil prices rose to session highs in North American trading on Wednesday, climbing back toward the strongest level in more than three weeks after data showed U.S. crude stockpiles fell for the sixth week in a row.

The U.S. West Texas Intermediate crude June contract tacked on 75 cents, or around 1.5%, to $49.39 a barrel by 10:35AM ET (14:35GMT). Prices were at around $48.73 prior to the release of the inventory data.

The U.S. benchmark rallied to its highest since April 28 at $49.66 at the start of the week on news that Saudi Arabia and Russia agreed to extend oil output cuts for a further nine months until March 2018.

Elsewhere, Brent oil for July delivery on the ICE Futures Exchange in London advanced 81 cents to $52.46 a barrel. The global benchmark touched its strongest level since April 21 at $52.63 on Monday.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 1.8 million barrels in the week ended May 12, the sixth weekly decline in a row.

Market analysts' expected a crude-stock decline of around 2.3 million barrels, while the American Petroleum Institute late Tuesday reported a supply-gain of 882,000 barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 35,000 barrels last week, the EIA said.

Total U.S. crude oil inventories stood at 520.8 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.

The report also showed that gasoline inventories declined by 413,000 barrels, compared to expectations for a fall of 731,000 barrels.

For distillate inventories including diesel, the EIA reported a decline of 1.9 million barrels.

Oil rallied at the start of the week after Saudi energy minister Khalid al-Falih and his Russian counterpart Alexander Novak said they had agreed to prolong an existing production cut deal by another nine months until March 2018.

However, the 12 remaining OPEC members and other producers participating in the cuts have to agree to the extension during a meeting on May 25.

In November last year, OPEC and other major global producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels.

Elsewhere on Nymex, gasoline futures for June rose 2.3 cents, or around 1.5%, to $1.615 a gallon, while June heating oil gained 2.3 cents to $1.539 a gallon.

Natural gas futures for June delivery slid 2.6 cents to $3.204 per million British thermal units.