Laura Banks
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Oil extends gains after drawdown in U.S. crude supplies

Crude futures continued to move higher Wednesday, riding on optimism that U.S. crude inventories likely shrank again last week.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in August CLQ7, +1.49  traded at $45.93 a barrel, up nearly 2%, or 89 cents in the Globex electronic session. September Brent crude LCOU7, +1.30 on London’s ICE Futures exchange rose 81 cents, or 1.7% to $48.34 a barrel.

Oil prices rose 1.4% in the U.S. session Tuesday, after industry group American Petroleum Institute’s data showed an 8.1 million barrel contraction in U.S. crude supplies last week. If confirmed by the Energy Information Administration, it would show strong U.S. gasoline demand thanks to the annual summer driving season. The EIA report is scheduled for 10:30 a.m. Eastern Time.

Production watch: The price gains come even as U.S. oil production has continued to increase. Unless there was a persistent downtrend in oil rig count and production, it would be premature to say that U.S. producers have felt the heat from the earlier oil price weakness, said Goldman Sachs.