Oil up after US crude stocks drop, still close to 11-year lows

Brent crude futures were up 37 cents at $36.48 a barrel while West Texas Intermediate futures were up 30 cents at $36.44

Oil prices edged up on Wednesday after an unexpected fall in U.S. crude inventories but remained not far above 11-year lows as supply continued to outstrip demand.

U.S. crude futures briefly traded above benchmark Brent prices, a trading pattern rarely seen over the last five years.

At 0910 GMT, Brent crude futures were up 37 cents at $36.48 a barrel while West Texas Intermediate (WTI) futures were up 30 cents at $36.44.

A day earlier Brent touched $35.98, its lowest since July 2004.

"The move with WTI trading above Brent is not fundamentally justified. It is overdone and you are likely to see some correction in that when markets return to some kind of normality in terms of volumes," said Virendra Chauhan, analyst at oil consultancy Energy Aspects.

Brent traded as low as $36.28 a barrel, flipping WTI from a long-standing discount into a slight premium over the international benchmark for the first time since a short period in November 2014.

U.S. crude inventories fell by 3.6 million barrels last week to 486.7 million, data published by the American Petroleum Institute showed on Tuesday. Analysts had expected an increase of 1.1 million barrels.

Official inventory data will be published on Wednesday.

"Inventories remain very, very high relative to the previous year and relative to the five-year norm," Chauhan said.

Since 2010, U.S. petroleum imports have fallen from a peak of almost 14 million barrels per day (bpd) to around 9 million bpd, government data shows.

But as shale output dips and the government eases restrictions on crude exports, the U.S. market could tighten while global supplies swell on sustained high output from Russia and the Organization of the Petroleum Exporting Countries (OPEC).

Although no immediate large-scale exports are expected, some U.S. oil will likely flow from the United States into the global market next year.