Oil Gains 1% After U.S. Crude Stocks Signal Tighter Supply

Oil prices rose at the start of Asian trade on Wednesday after industry data showed drawdowns in U.S. crude and fuel stockpiles, raising supply concerns.

The gains come on the back of news from Tuesday that the European Union is working on new sanctions against Russia for waging war on Ukraine that will target Moscow's oil industry.

European Commission President Ursula von der Leyen is expected to spell out the plans on Wednesday, officials said.

Brent crude futures rose 90 cents, or 0.9%, to $105.87 a barrel by 0001 GMT. WTI crude futures rose $1.00, or 1%, to $103.41 a barrel.

U.S. crude and fuel stocks fell last week, according to market sources citing American Petroleum Institute figures. Crude stocks fell by 3.5 million barrels for the week ended April 29, the sources said. [API/S]

"The API report had people stop worrying about the demand side and start worrying about the supply side again," said Phil Flynn, an analyst at Price Futures group.

U.S. government data on stockpiles is due on Wednesday.

During the previous session, demand worries stemming from China's prolonged COVID-19 lockdowns caused prices to fall by more than 2%.

Beijing is mass-testing residents to avert a lockdown similar to Shanghai's over the past month. The capital's restaurants were closed for dining in while some apartment blocks were sealed shut.