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Investing.com - Oil prices pared gains slightly after weekly data on crude inventories, despite a bigger-than-expected drawdown.

According to the Energy Information Administration, U.S. decreased by 2.7 million barrels, more than the estimated 1.89 million.

“The draw of nearly 3 million barrels at this stage of the driving season, with just a week to Labor Day, certainly speaks for the demand in crude,” Investing.com senior commodity analyst Barani Krishnan said after the report, adding that the 2.5-million barrel drop at Cushing, the major hub for oil trading in Oklahoma, also provided a more bullish case for oil.

But Krishnan said the price action after the release suggested that markets are still not comfortable with the overall fundamentals of oil.

“That may have to do with the fact that production isn’t easing at all, standing at near record highs of 12.3 million barrels per day,” he said.

gained 0.8% to $56.56 a barrel by 11:13 AM ET (15:13 GMT), lower than the $56.80 quoted prior to the publication.

London-traded rose 1.5% to $60.95 a barrel, pulling back from $61.03 ahead of the release.

Oil had already been trading higher as Tuesday’s from the American Petroleum Institute’s showed a larger 3.5-million-barrel drop in U.S. crude stockpiles.

Middle East tensions also remained in focus after Iranian Foreign Minister Mohammad Javad Zarif said Wednesday that in response to the United States’ “unpredictable” policies under U.S. President Donald Trump.

The dispute between Tehran and Washington have escalated since Trump’s administration last year quit an international deal to curb Iran’s nuclear ambitions and began to ratchet up sanctions. Iranian officials denounced the new penalties as “economic warfare”

As part of that conflict, oil prices have been supported in recent months after a series of attacks on international merchant vessels in the Strait of Hormuz, a major shipping point for world crude.

The U.S. has blamed Iran for the attacks, although Tehran has denied the allegations.

Iran has been attempting to circumvent the conflict with the U.S. by calling on Europe to help it avoid economic sanctions.

Zarif reiterated Wednesday Tehran’s offer to return to compliance with the deal if Europe once again fulfilled its obligations, even if the U.S. remained unwilling to return to the pact.

U.S. Secretary of State Mike Pompeo said on Tuesday that Washington was confident that it could .

“We have managed to take almost 2.7 million barrels of (Iranian) crude oil off of the market, denying Iran the wealth to create their terror campaign around the world, and we have managed to keep the oil markets fully supplied,” Pompeo said.