Oil prices gained today after crude inventories in the US dropped sharply, while geopolitical tensions in the Middle East also supported a rise.

Brent crude increased by 81 cents to $104.8, while US oil shot up $1.75 to $101.35 per barrel, reported Reuters.

In Libya, oil output has declined by a third after protesters closed several oil fields, while in Egypt, demonstrations by anti-government protestors raised apprehensions that stability in the region could falter further.

Oil prices received further support after the American Petroleum Institute said on Tuesday that US crude inventories had dropped by 9.4 million barrels in the week through to 28 June, while analysts, in a Reuters survey, had predicted a drawdown of 2.3 million barrels.

Investors will now focus on the US Department of Energy’s Energy Information Administration (EIA) data, which is expected to be released on Wednesday, to observe its outcome, and also await the US jobs data, due on Friday.

Further rise in prices is anticipated to be restricted due to weak economic data from China, which has sparked concerns about the outlook for demand from the world’s second biggest oil consumer.

According to a poll, growth in China’s services sector hit its weakest pace in nine months in June.

Image: Shutdown of several oil fields in Libya by protesters led to a fall in oil output by a third and boosted prices. Photo courtesy of NordNordWest, Yug.