Oil rose on Wednesday after plunging more than 2 per cent in the previous session as reports of falling US crude oil and fuel inventories refocused investors on robust demand in the world’s top oil consumer.

Brent crude climbed by 40 cents, or 0.5pc, to $81.17 a barrel by 0723 GMT. US West Texas Intermediate crude gained 48 cents, or 0.6pc, to $77.55 a barrel.

US crude oil stocks fell by about 6.1m barrels in the week ending April 21, according to market sources citing American Petroleum Institute (API) figures on Tuesday.

Analysts had expected crude inventories to fall by about 1.5m barrels.

Gasoline inventories fell 1.9m barrels last week, while distillate inventories rose by 1.7m barrels, the sources said the API reported. Official stockpiles data from the US government is due on Wednesday.

US crude oil stockpiles have been falling since the middle of March as refineries have increased their runs to produce more gasoline ahead of the peak summer demand period that starts in May. This has pushed WTI futures prices into a backwardation, when prompt futures are higher than later dated futures, reflecting the higher refinery demand.

“[The higher backwardation] jives with the strong utilisation rates as refiners are currently boiling a lot of crude oil at a point in the season when gasoline demand is just beginning to rise,” said oil analyst Stephen Schork in his Schork Report newsletter.

Oil prices dived more than 2pc on Tuesday, returning to the near the same level before the Organisation of the Petroleum Exporting Countries (OPEC) and other producer allies such as Russia, known as OPEC+, announced an additional output reduction in early April.

The upward momentum brought by the OPEC cut is running out and Russian oil exports did not show any obvious decrease, leaving the supply-side with no further supports, said Song Yang, analyst from China Galaxy Futures in a note.

While the API data pushed the market higher on Wednesday, lingering economic concerns and expectations of further interest rate hikes that could curtail fuel demand growth are countering the signs of improving short-term consumption gains.

US consumer confidence dropped to a nine-month low in April as worries about the future mounted, further heightening the risk that the economy could fall into recession this year.

Investors also showed concern that potential new interest rate hikes by inflation-fighting central banks could slow economic growth and dent energy demand in the United States, Britain and the European Union.

The US Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates at their coming meetings. The Fed meets May 2-3.