Oil prices closed higher due to a drop in inventories in the US.

The Brent premium over WTI narrowed to around $3.74 per barrel, the lowest since October 2023. The reduction in the differential means energy companies have less incentive to spend money on shipping tankers to the United States to collect crude for export.

Oil prices rose more than 2% on Wednesday, driven by a larger-than-expected weekly drop in US crude inventories and a weaker dollar overshadowing signs of slower economic growth in China.

Brent crude futures gained $1.35, or 1.61%, to $85.08 per barrel. West Texas Intermediate (WTI) crude futures advanced $2.09, or 2.59%, to $82.85.

On Tuesday, Brent closed at its lowest level since June 14 and WTI at its lowest since June 21.

The Brent premium over WTI narrowed to around $3.74 per barrel, the lowest since October 2023. The reduction in the differential means energy companies have less reason to spend money on shipping tankers to the United States to collect crude for export.

In the United States, the Energy Information Administration said energy companies withdrew 4.9 million barrels of crude from storage during the week ending July 12.

This compares with an expected drop of 30,000 barrels forecast in a Reuters survey and a decrease of 4.4 million barrels in a report from the American Petroleum Institute trade group.

A weaker dollar also helped support oil prices after the US currency hit a 17-week low against a basket of major currencies. A decline in the dollar can boost crude demand by making dollar-denominated commodities like oil cheaper for holders of other currencies.