Oil rallies beyond $72 on supply concerns

Oil prices extended gains on Wednesday, rising more than $1 on a reported decline in US crude inventories and the risk of supply disruptions.

Brent crude oil futures were up $1.13 at $72.71 a barrel by 1358 GMT, while US WTI crude futures gained $1.28 to $67.80, having hit their highest since late 2014 at $68.08.

"Yesterday evening saw the API report a surprising decrease in US crude oil stocks and a reduction in oil product stocks that was sharper than anticipated," Commerzbank oil analyst Carsten Fritsch said in a note.

US crude inventories fell by 1 million barrels last week to 428 million barrels, the American Petroleum Institute (API) said.

The Organization of the Petroleum Exporting Countries and 10 rival producers have restrained output by a joint 1.8 million barrels per day since January 2017 and pledged to do so until the end of this year.

"Despite an oil price of over $70 per barrel and the fact that the oversupply has been eliminated, a phase-out of the production cuts will not be on the agenda," Fritsch said.

Top oil exporter Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel, three industry sources said, a sign Riyadh will seek no changes to the supply-cutting deal even though the agreement's original target is within sight.