Brent futures for August settlement increased 17 cents to $75.55 a barrel on the London-based ICE Futures Europe exchange, after closing 9 cents higher at $75.38 on Tuesday. Iran's crude oil output could fall 1 million bpd as a result of renewed USA sanctions, according to a note from Standard Chartered.
WTI's discount to Brent narrowed 4 cents to $9.88 a barrel after industry data showed USA crude inventories fell by 2 million barrels, compared with analyst expectations for a decrease of 1.8 million barrels, American Petroleum Institute data showed.
"The continuing increase in crude oil production is weighing on the market, and quite significantly compared to this time past year", Andrew Lipow, president of Houston-based Lipow Oil Associates.
US crude was down nearly twice as much as Brent, widening its discount from Tuesday WTCLc1-LCOc1.
Saudi Arabia and Russian Federation were already discussing raising OPEC and non-OPEC oil output by around 1 million bpd, sources familiar with the matter said on May 25.
Balancing those expectations has been falling production in Venezuela, which has the world's biggest oil reserves and is a key supplier to American fuel markets.
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Ministers from the Organization of the Petroleum Exporting Countries and other participants in the output agreement meet in Vienna on June 22-23 to decide policy.
OPEC and non-member producers led by Russian Federation had agreed to curb output by about 1.8 million barrels per day until the end of 2018 to reduce global stocks, but the inventory overhang is now near OPEC's target. Its output has been hampered by inadequate investment, mismanagement and USA sanctions.
Three sources have told Reuters that Venezuelan state firm PDVSA is considering declaring force majeure on some exports, amid plummeting output and tanker bottlenecks at ports.
Fund managers this year racked up a record bet on a continued rise in oil prices, but the sustained increase in USA shale production and now the prospect of higher OPEC supply have prompted many investors to pare those positions.
Oil traded near $65 a barrel as an industry report showing a drop in American crude stockpiles helped counter fears that supplies may gain after the USA was said to ask OPEC to boost output.
"At the moment, the oil price is being driven by OPEC and views on how much and how quickly "OPEC plus" will raise output", Energy Aspects analyst Virendra Chauhan said.