Oil prices have risen to $57 a barrel on Wednesday as the American Petroleum Institute reported larger than expected draw down on US oil inventory.

Brent crude increased 50 cents to reach $57.35, while US crude futures increased 40 cents to $52.73, Reuters reported.

The larger drawdown of crude inventories negated the economic impact of Greece bailout and Chinese stock market crash.

According to the report from American Petroleum Institute, oil stockpiles in the US fell 958,000. Investors are now waiting for the official inventory data.

"Oil stockpiles in the US fell 958,000."

Jefferies Bache senior broker Christopher Bellew told the news agency: "The three main drivers pushing prices down are the steep fall in equities in China, with the implications that has for oil demand; the possibility of a nuclear agreement with Iran and the Greece crisis."

A drop in Chinese stocks was witnessed after investors were cautioned by the country’s securities regulator that they are in the grip of ‘panic sentiment’.

The total suspensions stood at approximately 1,300, which is around 45% of the market as more than 500 China-listed companies announced trading halts on the Shanghai as well as Shenzhen exchanges.

Greece has been asked to submit sweeping reform proposal by the end of this week, if it seeks bail out from creditors in Eurozone.

Iran and six world powers have set a deadline of Friday to negotiate a deal to put an end to the country’s disputed nuclear programme.

Following the deal, Iran’s oil exports are expected to rise adding to output from the Organization of the Petroleum Exporting Countries.