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Brent crude futures for October rose by 42 cents, or 0.49%, to
$85.91 a barrel by 0748 GMT. The October contract expires on
Thursday and the more active November contract was at $85.32, up
41 cents.
U.S. West Texas Intermediate crude futures rose 50 cents, or
0.62%, to $81.66.
Both benchmarks rallied more than a dollar on Tuesday as the
U.S. dollar slid after prospects of further increases to
interest rates eased after softer U.S. job data.
U.S. crude stocks fell by a bigger than expected 11.5 million
barrels in the week ended Aug. 25, market sources said, citing
American Petroleum Institute figures on Tuesday.
The drop suggests firm demand, said Fujitomi Securities analyst
Toshitaka Tazawa.
Investors also had an eye on Hurricane Idalia as it moves over
the Gulf of Mexico to the east of major U.S. oil and natural gas
production sites. The region accounts for about 15% of U.S. oil
output and about 5% of natural gas production, according to the
Energy Information Administration.
Oil major Chevron Corp evacuated some staff from the region but
production was continuing.
Elsewhere, analysts expect Saudi Arabia, the world's biggest oil
exporter, to extend its voluntary output cut into October,
keeping oil supply tight.
Based on that expectation, refining sources surveyed by Reuters
forecast that Saudi Arabia's official selling prices for all
crude grades sold to Asia in October will be raised to their
highest this year.
Meanwhile, the military in Gabon seized power on Wednesday,
which could hit the country's crude supplies and tighten the
market further. Gabon exported a monthly average of 160,000
barrels per day to Asia from May to July, Kpler ship-tracking
data showed.
Oil's gains were capped, however, by concerns over fuel demand
and the mixed economic situation in China, the world's biggest
oil importer.
(Reporting by Paul Carsten in London, Yuka Obayashi in Tokyo and
Trixie Yap in SingaporeEditing by David Goodman)
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