By Stephanie Yang and Neanda Salvaterra 

Oil prices closed at a three-week high on Wednesday, boosted by signs of strong demand for crude products and renewed commitments by major oil producers to rein in production.

Light, sweet crude for May delivery gained $1.14, or 2.4%, to $49.51 a barrel on the New York Mercantile Exchange, up three of the past four sessions. Brent crude, the global oil benchmark, rose $1.09, or 2.1%, to $52.42 a barrel.

On Wednesday, data from the U.S. Energy Information Administration showed a larger-than-expected decline in gasoline and distillate stocks, while refiners processed crude oil at a higher rate. Crude inventories rose 900,000 barrels in the week ended March 24, lower than the average forecast from analysts and traders surveyed by The Wall Street Journal.

The positive data helped oil recoup losses, after previous reports that showed inventories rising to record levels sent prices tumbling below $50 a barrel in early March. Signs of healthy demand have also eased concerns that an increase in U.S. production will keep supply elevated, even as the Organization of the Petroleum Exporting Countries has cut production to help end a global supply glut.

"The market was starting to turn a corner," said Ric Navy, senior vice president for energy futures at brokerage R.J. O'Brien & Associates LLC. "I think people are feeling just that much more comfortable buying into it again."

Strong gasoline consumption was a highlight of the Wednesday data, analysts said. Gasoline stockpiles fell by 3.7 million barrels, compared to expectations for a 1.9 million barrel decline. Distillates dropped by 2.5 million barrels compared to estimates for a fall of 1 million barrels.

Increasing demand should help chip away at high levels of crude inventories, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc.

"Gasoline is really starting to assert its influence here in the market on a broad scale," he said.

The drop in oil products has brought inventories to a 21-month low, according to analysts at Standard Chartered. As refinery activity increases, that could further suppress crude inventories, helping oil rally, the bank said in a Wednesday note.

Investors also welcomed comments from OPEC members who are showing a willingness to cut more of their supplies to make a dent in global inventories. United Arab Emirates announced plans to reduce its production by about 200,000 barrels from March to May, "which is actually more than was agreed," said Commerzbank analysts in a recent note.

Crude prices received support after Libya reported the closure of key pipelines, as tension between the government and a militia flared up again, removing about 250,000 oil barrels a day from the market.

"We are seeing tighter supply and this is very likely to continue well into April," said Georgi Slavov, the global head of energy research at Marex Spectron.

Gasoline futures rose 2.3%, to $1.6720 a gallon, and diesel futures gained 1.7%, to $1.5425 a gallon, taking prices for both to three-week highs.

--Jenny W. Hsu contributed to this article.

Write to Stephanie Yang at stephanie.yang@wsj.com and Neanda Salvaterra at neanda.salvaterra@wsj.com

(END) Dow Jones Newswires

March 29, 2017 16:11 ET (20:11 GMT)

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