Oil prices increase on a weaker U.S. dollar and on the International Energy Agency report

Oil prices increased on a weaker U.S. dollar and on the International Energy Agency (IEA) report. The U.S. dollar dropped against other currencies on the further yuan devaluation. China's central bank set Wednesday's daily fixing at 6.3306 per U.S. dollar, down from 6.3231 on Tuesday.

The central bank said on Tuesday that it was a "one-off depreciation".

"Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan," the central bank said on Wednesday.

A weaker yuan should help to boost the activity in the manufacturing sector and exports, which dropped 8.3% year-on-year in July.

The IEA released its monthly report on Wednesday. The agency upgraded its oil demand forecasts. The IEA expects global oil demand to expand by 1.6 million barrels a day this year, up by 200,000 barrels a day from its previous estimate.

Oil demand in 2016 is expected to be 1.4 million barrels a day.

The agency noted that oil oversupply will persist through 2016.

"While a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016 - suggesting global inventories will pile up further," the IEA said.

According to the IEA, low fuel prices lead to higher consumption.

Market participants also eyed the U.S. crude oil inventories data. U.S. crude inventories fell by 1.682 million barrels to 453.6 million in the week to August 07.

Analysts had expected U.S. crude oil inventories to decline by 2.00 million barrels.

Gasoline inventories fell by 1.3 million barrels to 57.1 million barrels last week, according to the EIA.

Crude stocks at the Cushing, Oklahoma, declined by 542,000 barrels.

U.S. crude oil imports increased by 393,000 barrels per day.

Oil production in the U.S. was down to 9.39 million barrels in last week from 9.47 million in the previous week.

Refineries in the U.S. were running at 96.1% of capacity.

WTI crude oil for September delivery climbed to $43.33 a barrel on the New York Mercantile Exchange.

Brent crude oil for September increased to $49.37 a barrel on ICE Futures Europe.