Oil rises on US demand hopes

Oil prices rose on Wednesday, to head for the first daily gain in 5 days, on hopes of improved US demand after a sharp drop in the US crude inventories for the second straight week, and a slowing US production, according to the US Energy Information Administration's weekly report.

US crude rose 0.8% to $39.89 a barrel, after opening at $39.58, and hit a session-low of $39.15, and Brent rose 1% to $41.76 , after opening at $41.34, and hit a low of $41.28. 

Oil prices lost around 0.4% yesterday, posting the fourth straight daily loss, on global demand concerns and Libya restarting its production.

The US Energy Administration reported yesterday a drop in commercial inventories by 1.6 million barrels during the week ending September 18, missing estimates of a drop by 2.5 million.

Total inventories tumbled to 494 million barrels, the lowest since April 3 in a positive sign for US demand. 

While the US production fell 200,000 barrels during the past week, to a total of 10.7 million barrels per day, in the first weekly drop in 3 weeks.