OilBarrelCorbisBarbaraDavidson460Brent oil rose by more than $1 a barrel on Wednesday after U.S. oil inventories increased less than expected last week and in reaction to an increase in demand for distillates.

Optimism about nuclear talks with Iran kept prices in check.

Data from the U.S. Energy Information Administration showed that crude stocks rose by 375,000 barrels, well below the forecast for a 900,000 barrel increase. Distillate stocks fell much more sharply than expected and demand over the past four weeks was up 8.8 percent from a year ago, and at its highest level since November 2011.

Brent crude for January traded above $108, up more than $1, after posting its biggest daily fall in nearly two weeks on Tuesday as Libya resumed some oil exports.

The U.S. crude contract for December trimmed early gains, virtually flat on the day above $93 a barrel. Both U.S. crude and Brent began a new leg higher after the Department of Energy showed a smaller-than-expected build in oil inventories last week. Oil inventories rose 375,000 barrels last week, compared with analysts’ forecast of a 900,000-barrel build.