NEW YORK : Oil prices surged on Wednesday after a report showed a drop in U.S. crude stockpiles, fuelling energy shares and helping lift Wall Street after two down sessions.

In Europe, bond yields jumped while pan-European STOXX index slumped 0.6 percent, with markets rattled by the prospect of the region’s central bank eventually winding down its bond-buying stimulus. Oil prices rose to their highest since June after the U.S. government reported another surprise weekly drawdown in crude inventories.

The U.S. Energy Information Administration (EIA) said crude stockpiles fell nearly 3 million barrels for the week ended Sept. 30, marking a fifth straight weekly drop. Analysts polled by Reuters had forecast a build of 2.6 million barrels.

Brent crude was up 2.1 percent, at $51.94 a barrel, while U.S. West Texas Intermediate crude rose 2.3 percent at $49.83.

The Dow Jones industrial average rose 111.34 points, or 0.61 percent, to 18,279.79, the S&P 500 gained 9.25 points, or 0.43 percent, to 2,159.74 and the Nasdaq Composite added 30.66 points, or 0.58 percent, to 5,320.31.

The energy sector gained 1.5 percent.

U.S. stocks have been pressured this week by concerns over Britain’s exit from the European Union and expectations of a Federal Reserve interest rate increase in the coming months.

Chicago Federal Reserve Bank President Charles Evans said he would be “fine” with raising U.S. interest rates by year-end if U.S. economic data continued to come in firm.

Traders see a 64-percent chance the Fed will hike at its December meeting, according to the CME FedWatch website.

“People are certainly waiting for that inevitable interest rate rise by the Fed, but I think they’re just not sure if that’s a sign that things are better and earnings are likely to improve, or a reason for people to sell stocks because rates are rising,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

Euro zone bond yields soared amid concerns the European Central Bank might reduce its asset purchases before the program finally ends. A Bloomberg article on Tuesday cited sources as saying the ECB would probably wind down the monthly 80-billion euro ($90 billion) scheme gradually.

Germany’s 10-year Bund yield - the euro zone benchmark - rose more than 8 basis points to nearly flat. Italy’s 10-year bond yield rose nearly 10 basis points to 1.358 percent.

“I am surprised at the reaction, but it’s just this notion that the ECB may be discussing tapering one day that has upset the market,” said ING rates strategist Benjamin Schroeder.

Benchmark U.S. 10-year notes were last down 11/32 in price to yield nearly 1.72 percent, up from 1.68 percent late Tuesday.

A report showed U.S. private employers added 154,000 jobs in September, below economists’ expectations, with the more closely watched U.S. jobs report due on Friday.

The dollar was down 0.04 percent against a basket of currencies in choppy trading.

Sterling rose 0.3 percent against the dollar, after dipping below $1.27 and hitting a fresh three-decade low against the greenback earlier in the session.