Oil prices rose by 3% on Wednesday as the second consecutive weekly decrease from US crude stocks was larger than expected, offsetting concerns that future interest rate hikes would impede economic growth and diminish global oil demand.

Brent futures rose $1.77, or 2.5%, to $74.03 per barrel. WTI crude in the United States climbed $1.86, or 2.8%, to end at $69.56, reducing Brent’s premium over WTI to its smallest since June 9.

The U.S. Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million barrel draw analysts forecast in a Reuters poll and also much bigger than the 2.8 million barrel draw a year earlier. It also exceeded the average draw in the five years from 2018-2022.

“Overall, very solid numbers that kind of fly in the face of people who have been saying that the market is oversupplied. This report could be a bottom (for oil prices),” said Phil Flynn, an analyst at Price Futures Group.

Investors remained cautious that interest rate hikes could slow economic growth and reduce oil demand.

“If anybody is going to rain on the bull market it will be (U.S. Federal Reserve Chair) Jerome Powell,” Flynn said.

Leaders of the world’s top central banks reaffirmed that they see further policy tightening needed to tame inflation. Powell did not rule out further hikes at consecutive Fed meetings while European Central Bank President Christine Lagarde confirmed expectations the bank will raise rates in July, calling such a move “likely”.

The 12-month backwardation for Brent and WTI – a pricing dynamic indicating higher demand for immediate delivery – both at their lowest levels since December 2022. Analysts at energy consulting firm Gelber and Associates said that suggested “diminishing worries over potential supply shortages.”

Some analysts expect the market to tighten in the second half, citing ongoing supply cuts by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, and Saudi Arabia’s voluntary reduction for July.

In China, the world’s second-biggest oil consumer, annual profits at industrial firms extended a double-digit decline in the first five months as softening demand squeezed margins, reinforcing hopes of more policy support for a stuttering post-COVID economic recovery.