The price of crude was pushed up following the reports, and were continuing to climb higher this morning. Brent crude futures rose as high as $63.88 a barrel earlier today, up 3.2 percent. US West Texas Intermediate (WTI) crude futures were at one point worth $55.49 a barrel, an increase of 3.2 percent. By 9.18am BST, brent crude futures were at $62.22 a barrel, while WTI crude futures were on $55.36.
A US official this morning claimed an American drone was taken down in international airspace over the Strait of Hormuz by an Iranian surface-to-air missile.
Reports out of Iran said a US “spy” drone had been downed by Revolutionary Guards in the southern province of Hormozgan.
Tensions have been rising in the Middle East after two oil tankers were attacked near the Strait of Hormuz last week.
Washington blamed Tehran for the tanker attacks, while Iran denied any involvement.
Oil prices had risen earlier in the day supported by signs of improving demand in the US.
After swelling to near two-year highs, US crude stocks fell by 3.1 million barrels last week, compared with analyst expectations for a draw of 1.1 million barrels, the Energy Information Administration (EIA) said on Wednesday.
Refined products also posted surprise drawdowns as gasoline demand ticked higher on a weekly basis and surged 6.5 percent from a year earlier.
Members of the Organization of the Petroleum Exporting Countries (OPEC) agreed to meet on July 1, followed by a meeting with non-OPEC allies on July 2, after weeks of wrangling over dates.
OPEC and its allies will discuss whether to extend a deal on cutting 1.2 million barrels per day of production that runs out this month.
Oil prices briefly turned positive after the EIA report.
Phil Flynn, analyst at Price Futures Group in Chicago, said: “I think, overall, it was a positive report.
“Even with the bullish report, after the big run-up yesterday, the market is hesitant to drive a lot higher.”
It comes after the US Federal Reserve held interest rates steady, as expected, after concluding a two-day policy meeting on Wednesday.
Bob Yawger, director of energy futures at Mizuho in New York, said: “The crude oil market is correlating to that.
“I don’t think it’s more than a sentiment thing along those lines.”