The U.S. Energy Department’s inventory release showed that crude stockpiles recorded a lower-than-expected weekly draw. On a further bearish note, the report revealed that refined product inventories, gasoline and distillate, both rose slightly from their week earlier levels. Meanwhile, refinery activity improved.

However, the talking point from the data sets was the steady trend of rising domestic oil production that continues to be the biggest headwind for the market.

Despite the mostly negative data sets, the benchmark was buoyed by the fact that commercial inventories actually dropped after notching up successive weekly builds.

The U.S. oil benchmark also rallied on expectations that OPEC and other major producers will agree to expand their output-cut deal beyond March when they meet at the end of the month. The agreement, already renewed once, keeps 1.8 million barrels a day off the market in an attempt to clear a supply glut.

Further support came from the shutdown of TransCanada Corporation’s (TRP – Free Report) 590,000 barrel-per-day Keystone oil pipeline – one of the largest from Canada to the United States – due to a leak and subsequent cleanup operations.

As a result, the front month West Texas Intermediate (WTI) crude futures gained 2.1% (or $1.19) to $58.02 per barrel yesterday – the highest settlement since Jun 30, 2015.

Energy Stocks Gain

The bullish oil market sentiment encouraged buying in energy stocks, which lifted the Energy Select Sector SPDR – an assortment of the largest U.S. energy companies – almost 0.4% Wednesday. Some of the biggest gainers of the S&P 500 yesterday were oil and oil-related companies like Chesapeake Energy Corporation (CHK – Free Report) , Range Resources Corporation (RRC – Free Report) , Marathon Oil Corporation (MRO – Free Report) , Southwestern Energy Company (SWN – Free Report) and Helmerich & Payne, Inc. (HP – Free Report) .