The key story supporting the market and driving the price action is the OPEC-led production cuts.
Other than the inventory levels, comments from the Azerbaijan's oil minister that OPEC+ alliance needs to extend production cuts in order to support crude recovery also please the energy buyers.
While WTI crude future prices rose 0.7 percent on Wednesday, crude oil prices are down from $55.26 per barrel on Friday, its highest level for the year.
US crude inventories rose by 2.5 million barrels last week, the American Petroleum Institute said on Tuesday.
USA crude futures were down $1.65 a barrel, or 3.05 percent, at $52.38.
Venezuela, which produced 1.15 million barrels per day in December, was forced to look for alternative clients for its crude oil following sanctions that prevent the state oil company PDVSA from exporting to the USA unless the revenues are paid to opposition leader Juan Guaido.
United States distillate stocks fell by 2.3 million barrels, while inventories of other refined fuels dropped by 2.9 million barrels.
Citgo, the eighth-largest US refiner and Venezuela's top foreign asset, is in the middle of a tug of war as the Trump administration has made aggressive moves to remove it from Maduro's control. "Moreover, lower oil prices - prices were between 14% and 18% lower in January than their 2018 average - are likely to stimulate economic activity and oil demand, particularly in emerging markets", said Jean-Pierre Durante, Head of Applied Research at Pictet Wealth Management.
"The price has yet to react in any noticeable way", Fritsch said of the sanctions. The cartel and the world's biggest exporter, Saudi Arabia, slashed its output more than expected under the OPEC deal, to 10.2 million barrels a day in January and is aiming to pump around 100,000 barrels less in February. Venezuela, an OPEC member, is like Iran and Libya exempt from making voluntary curbs under the deal. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.
Providing global markets with price support are supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) aimed at tightening the market. Oil fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.
Adding to the bearish sentiment, CNBC reported that a meeting between President Donald Trump and his Chinese counterpart Xi Jinping was "highly unlikely" before the March 1 deadline set by the USA for reaching a trade deal.
Trump has vowed to increase US tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent now if the two sides can not reach a deal by March 1.