Oil prices climbed midweek after US weekly data showed a fall in stocks that helped ease oversupply worries.

A trade dispute between the US and China has been hanging over the market, dampening recent enthusiasm but the weekly data helped breathe new life into the market.

The US Energy Information Administration (EIA) had released data showing crude inventories had plunged more than expected to their lowest level since 2015 as exports jumped and stocks at the Cushing hub dropped.

Crude stocks fell by 6 million barrels in the week to July 20, compared with analysts' expectations for a decrease of 2.3 million barrels, the EIA data showed.

"You’re seeing a 6 million draw, so the tightening of the fundamental picture continues,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

Gasoline stocks fell by 2.3 million barrels while distillate stockpiles, which include diesel and heating oil, eased by 100,000 barrels. The data helped ease worries about oversupply that have dragged on markets in recent weeks.

Prices had been weak on Monday as the focus turned to these concerns following rising tensions between the US and Iran, which had lifted crude early in the session.

Iran's Supreme Leader Ayatollah Ali Khamenei backed a suggestion by President Hassan Rouhani that Iran could block oil shipments from the Persian Gulf if its own exports were halted.

The Iranian leadership was reacting to the threat of US sanctions that are due to come into full force on 4 November.

Trump is seeking to reduce Iranian oil exports to zero by forcing major buyers of Iranian oil to curtail their purchases.

Late on Sunday night, Trump tweeted that Iran risked dire consequences “the like of which few throughout history have suffered before” if the Islamic Republic made more threats against the US.

Saudi Arabia and other large producers have been ramping up production to offset losses from Iran that are likely to come with the approach of the November deadline.

Brent was changing hands at about $74.09 per barrel in late London trading on Wednesday compared to $72.70 per barrel around the same time the previous week.

West Texas Intermediate for September delivery was being offered at around $69.50 per barrel in early New York trade compared to $68.20 the previous week.

Sentiment was also reportedly helped by an International Monetary Fund report about skyrocketing inflation in Venezuela, limiting its ability to boost oil output.

Oil prices have come under pressure this month as the trade dispute between the US and China, as well as other major economic blocs, has raised the possibility of slower economic growth and weaker global energy demand as higher tariffs stifle imports.

But for now the global economy is still growing strongly and it is not clear how the trade disputes will affect business.

Reports that China will increase infrastructure spending have also helped reduce concerns that the trade tensions with the US will dent Chinese demand for oil.

Weekly

Crude climbs after US stocks show decline