Prices extended gains in post-settlement trade after industry data from the American Petroleum Institute showed USA crude inventories slumped 8.6 million barrels last week, versus analysts' forecasts of a 805,000-barrel decrease.
US crude stocks fell 5.3 million barrels in the week to September 7 to 396.2 million barrels, the lowest since February 2015 and about 3 percent below the five-year average for this time of year, the US Energy Information Administration (EIA) said on Wednesday.
Worldwide oil benchmark, Brent crude, extended its gains on Wednesday, trading near a two-month high as shrinking oil inventories pointed to an increasingly tight global market.
"Things are tightening up", the agency said in its monthly report, but added: "As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the United States dollar raising the cost of imported energy".
Washington is putting pressure on other countries to also cut Iran imports, with close allies like South Korea and Japan, but also India, showing signs of falling in line.
Gordon Gray, HSBC's global head of oil and gas equity research, said there were "real risks" that Brent could hit $100 a barrel.
A group of OPEC and non-OPEC producers have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on producers to raise output.
Oil traders were also watching the progress of category 4 Hurricane Florence, which is expected to make landfall in the U.S. by Friday.
Brent crude oil LCOc1 fell $1.56, or 2 percent, to settle at $78.18 per barrel.
Oil prices rose on Tuesday amid looming United States sanctions against Iran's petroleum industry, despite efforts by Washington to get other major suppliers to make up for the expected disruption.
"Crude oil production in OPEC rose month-on-month by 278,000 barrels a day in August, to 32.57 million bpd in August", the oil cartel said.
S&P global Platts said OPEC, in a report, indicated demand for the organization's own crude oil in September will be nearly 1 million bpd more than the level produced in August.
"Saudi Arabia, OPEC's largest producer, saw its output rise modestly to 10.40 million bpd, up 38,000 bpd from the previous month, according to secondary sources, S&P Platts reported".
That price range could be "tested" as the oil market enters "a very crucial period", the Paris-based agency said in its monthly report.
A six-country monitoring committee overseeing the OPEC/non-OPEC supply accord will meet September 23 in Algiers to assess market fundamentals and potentially make output policy recommendations.
"World demand will average 98.82 million bpd in 2018, a demand growth of 1.62 million bpd", said S&P.
Although the EIA does not publish crude production forecasts for Russia and Saudi Arabia in its short term outlook, it expects that USA output will continue to exceed Russian and Saudi production for the remaining months of 2018 and through 2019.