An oil pumping machine is seen as non-usable gases are being burnt behind it in Sakir, south of Manama, October 11, 2014.
An oil pumping machine is seen as non-usable gases are being burnt behind it in Sakir, south of Manama, October 11, 2014. Reuters / Hamad I Mohammed

Oil prices edged up on Thursday, extending gains from the previous session, buoyed by lower crude inventories and higher gasoline demand in the United States.

Brent crude futures for September rose 40 cents, or 0.4%, to $107.02 a barrel by 0010 GMT, after gaining $2.22 on Wednesday.

U.S. West Texas Intermediate crude (WTI) was at $97.78 a barrel, up 52 cents, or 0.5%, after rising $2.28 in the previous session.

U.S. crude oil stockpiles fell by 4.5 million barrels last week, while U.S. gasoline demand rebounded by 8.5% week on week, according to data from the Energy Information Administration.

Exports also climbed to a record high as WTI traded at a steep discount to Brent, making purchases of U.S. crude grades more attractive to foreign buyers.

On the demand side, the U.S. Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point, in line with expectations, to cool inflation, while the dollar fell on hopes for a slower hiking path.

The weaker dollar also helped crude prices notch some gains as it makes oil, priced in dollars, cheaper for buyers in other countries to purchase.

Prices also found support as the Group of Seven richest economies aim to have a price-capping mechanism on Russian oil exports in place by Dec. 5, a senior G7 official said on Wednesday.

U.S. crude oil production growth could also be limited by the availability of fracking equipment and crews, as well as capital constraints, executives said this week.

In the meantime, Russia has cut gas supply via Nord Stream 1 - its main gas link to Europe - to just 20% of capacity. That could lead to switching to crude from gas and prop up prices for oil in the short term, analysts said.