By Arathy Somasekhar

April 3 (Reuters) - Oil prices extended gains on

Wednesday as a larger than expected fall in U.S. crude

inventories and escalating geopolitical tensions raised investor

worries about tighter supplies.

Brent futures for June delivery rose 20 cents, or

0.22%, to $89.12 per barrel, while U.S. West Texas Intermediate

(WTI) crude futures for May climbed 17 cents, or about 0.2%, to

$85.32 a barrel, at 0015 GMT.

Both Brent and WTI had climbed to its highest since October

on the previous day.

U.S. crude oil inventories fell by 2.3 million barrels last

week, higher than the 1.5 million barrel drop forecast by

analysts in a Reuters poll. U.S. government data is due later on

Wednesday.

On the geopolitical front, a Ukrainian drone struck one of

Russia's biggest refineries in an attack Russia initially said

it repelled.

Russia, among the top three global oil producers and one of

the largest exporters of oil products, has been contending with

Ukrainian attacks on oil refineries and has also attacked

Ukrainian energy infrastructure.

Elsewhere, Iran said it would take revenge against Israel

for an airstrike that killed two of its generals and five

military advisers at its embassy compound in Damascus, raising

the risk of further escalation in the Middle East conflict.

Also tightening supplies, Mexico's state energy company

Pemex requested its trading unit to cancel up to 436,000 barrels

per day of crude exports this month as it gets ready to process

domestic oil at the new Dos Bocas refinery, an internal document

seen by Reuters showed.

However, an OPEC+ ministerial panel is unlikely to recommend

any oil output policy changes at a meeting on Wednesday, five

OPEC+ sources told Reuters.

The U.S. dollar also edged down against a basket of

currencies on Wednesday, helping support demand for

dollar-denominated commodities like oil.