Oil prices rose on Wednesday after industry data showed a surprise drop in US crude stocks, suggesting demand is holding up despite steep interest rate hikes dampening global growth.

Brent crude rose 54 cents, or 0.6 per cent, to $95.19 a barrel by 0723 GMT, while US West Texas Intermediate (WTI) crude rose 72 cents, or 0.8 per cent, to $89.09 a barrel.

The benchmarks rose about 2 per cent in the previous session on a weaker US dollar and after an unverified note trending on social media said the Chinese government was going to consider ways to relax COVID-19 rules from March 2023, potentially boosting demand in the world’s No.2 oil user.

In a further positive sign for demand, US crude oil stocks fell by about 6.5 million barrels for the week ended Oct. 28, according to market sources citing American Petroleum Institute figures.

Eight analysts polled by Reuters had on average expected crude inventories to rise by 400,000 barrels.

At the same time, gasoline inventories fell more than expected, with stockpiles down by 2.6 million barrels compared with analysts’ forecasts for a drawdown of 1.4 million barrels.

“Apart from the larger-than-expected draw in the US inventory data, the optimism from unconfirmed news of China’s zero-COVID exit also supported oil’s upside momentum,” CMC Markets analyst Tina Teng said.

China’s zero-COVID policy has been a key factor in keeping a lid on oil prices as repeated lockdowns have slowed growth and pared oil demand in the world’s second-largest economy.

Teng added that a softer US dollar was also underpinning oil prices. A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies.

The greenback slipped from a near one-week peak versus major peers, with traders on tenterhooks before the looming Federal Reserve rate decision on Wednesday.

The potential disruption from the European Union embargo on Russian oil that is set to start on Dec. 5 may also be pushing prices higher. The ban, a reaction to Russia’s invasion of Ukraine, will be followed by a halt on oil product imports in February.

“Still, with the EU embargo in the market headlights now, implying the oil complex may lose anywhere between 1-3 million barrels per day, oil could power higher when the embargo kicks in and/or any nod from China that an earlier-than-expected China reopening is on the cards,” said Stephen Innes, managing partner at SPI Asset Management in a note.