08:58 AM EST, 01/08/2025 (MT Newswires) -- Oil prices rose to a three-month high early on Wednesday after a report showed an unexpectedly large drop in U.S. inventories while OPEC+ supplies fell last month.

West Texas Intermediate crude oil for February delivery was last seen up US$0.44 to US$74.69 per barrel, the highest since Oct. 11, while March Brent crude was up US$0.39 to US$77.44.

In its weekly survey, the American Petroleum Institute reported U.S. oil inventories fell by 4.02-million barrels last week, well more than the consensus estimate for a 250,000 barrel drop according to Oilprice.com. Product inventories were sharply higher, with gasoline stocks up by 7.33-million barrels and distillates up by 3.2-million barrels. The Energy Information Administration will release official data later on Wednesday morning

The drop in stocks comes amid tightening supply with reports a Chinese port operator is banning sanctioned tankers bringing oil from Russia and Iran, while Reuters reported OPEC production fell by 50,000 barrels per day in December to 26.46 million bpd. As well, Bloomberg reported Russian production fell to 8.97-million bpd last month, the lowest in more than a year.

"Crude oil futures have resumed their ascent following a brief pause. This rise is supported by reduced flows from Iran and Russia amid sanctions, with shipments from Russia tumbling to a 16-month low," Saxo Bank noted.