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Oil up 2% after third surprise weekly US crude draw

[NEW YORK] Oil prices were up as much as 2 per cent on Wednesday after a surprise drop in crude stockpiles reported by the US government for a third week in a row.

The US Energy Information Administration (EIA) said domestic crude inventories fell by 6.2 million barrels for the week ended Sept 16, versus a 3.4 million-barrel drop forecast by oil market analysts polled by Reuters.

Crude stocks in the world's largest oil consumer have fallen since this month began. Some 14.5 million barrels were reported drawn for the week ended Sept 2, the biggest weekly drop in 15 years after a tropical storm that slowed the arrival of oil imports in the US Gulf Coast. In the subsequent week to Sept 9, there was another decline of 559,000 barrels.

While the draws have put a bullish face of sorts on oil, they also contrast with surging production from Opec and other major producers such as Russia, causing a swing in crude prices lately.

"We are still very well supplied for this time of year," said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in New York.

Brent crude futures were up 80 cents, or 1.8 per cent, at US$46.68 per barrel by 11:03 am EDT (1503 GMT). They had risen more than US$1.20 at the session high.

US West Texas Intermediate (WTI) crude futures were up US$1.05 cents, or 2.4 per cent, at US$45.10, versus a session peak of US$45.49.

Some market participants also expressed surprise with the crude draw announced by the EIA when crude imports as a whole rose and refinery runs fell.

US crude imports rose last week by 77,000 barrels per day, although they dropped sharply in the US Gulf, falling to 2.88 million bpd from 3.41 million bpd in the previous week.

Refinery crude runs fell by 143,000 barrels per day, EIA data showed. Refinery utilization rates fell by 0.9 percentage points.