Oil prices have registered an increase, boosted by a report that stated US crude stockpiles dropped last week.

However, analysts urged caution, stating that rising US production and a dip in seasonal demand could impact gains made.

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Brent crude futures rose 58 cents, or 0.9%, to trade at $67.44 per barrel, while US West Texas Intermediate (WTI) crude futures increased 49 cents, or 0.8%, to reach $63.88 a barrel, according to Reuters.

Reversal of the declining trend was made possible by a report released by the American Petroleum Institute (API) saying that US crude inventories dropped by 1.1 million barrels in the week to 2 February to 418.4 million barrels.

Ashburton Global Energy fund manager Richard Robinson was quoted by the news agency as saying: “Evidence points to a global inventory market that has arguably already balanced, with days of forward cover in the low single digits or possibly even lower, which should support the spot price going forward.”

“The combination of rising risk-aversion and fading short-term fundamental support continues to put downward pressure on oil.”

Refinery maintenances at the end of the northern hemisphere winter season is expected to result in lower demand in the short-term.

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In addition, volatility in financial markets presents a challenge to oil prices.

Saxo Bank commodity strategy head Ole Hansen was quoted by the news agency as saying: “The combination of rising risk-aversion and fading short-term fundamental support continues to put downward pressure on oil.”

Soaring US crude production, which increased to more than ten million barrels per day (bpd), continues to loom large over oil markets.

Based on data from the US Energy Information Administration (EIA), US output is expected to increase to an average of 10.59 million bpd this year, and then 11.18 million bpd by 2019.