Oil rose above $71 a barrel on Wednesday following a large drop in crude inventories in the United States, the world's top energy consumer, and output disruptions from militant attacks in Nigeria.
U.S. crude futures were trading up $1.33 to $71.22 a barrel by 8:40 a.m. EDT. London Brent crude rose $1.48 to $70.78.
Weekly oil data from a U.S. industry group released late on Tuesday helped oil prices to reverse the day's loss, which had been fueled by weak U.S. consumer confidence.
Data from the American Petroleum Institute Tuesday showed a 6.8 million barrel decline in U.S. crude inventories, larger than analysts' forecast for a drawdown of 2 million barrels.
Maybe we have already seen the peaks in the stock levels and we could start entering a phase where we see a slow reduction (in stock levels), Olivier Jakob with Petromatrix said.
Market focus has now shifted to a separate set of data from the U.S. government, which is seen as more reliable by investors, due out later Wednesday.
The U.S. Energy Information Administration (EIA) is also expected to show a fall in crude inventories due to higher refinery runs ahead of the Independence Day weekend.
OPEC's policy to keep output cuts intact since last year has started to be reflected into some statistics and traders would be watching U.S. crude import volumes in the EIA statistics, Jakob said.
A Reuters survey showed OPEC members' compliance rate to the agreed 4.2 million barrels per day supply curve at 72 percent in June, a fall from 75 percent in May.
The survey showed a fall in output in Nigeria. The recent escalation of civil unrest in its oil-rich Niger Delta region has hobbled Nigeria's output, providing support to oil prices.
Tuesday, oil major Royal Dutch Shell said attacks by Nigerian militants had cut its output to around half of what it was producing earlier this year.
Oil prices, which tumbled from a record high of over $147 struck in July last year to below $33 in December, have rallied in recent months due mainly to hopes for economic recovery.
They marked a 42 percent gain in the second quarter, the highest quarterly gain since 1990.
The equity market began the third quarter on an upbeat note, after the world MSCI index marked the highest quarterly gain since 1990 for the second quarter.
Europe's FTSEurofirst 300 index was up and U.S. stock futures pointed to a higher open.
(Additional reporting by Fayen Wong in Perth; editing by James Jukwey)