Oil prices are rising after a government report showed crude stockpiles fell more than expected and Iran test-fired nine missiles, including a type capable of reaching Israel.

Light, sweet crude for August delivery is up $1.31 at $137.35 a barrel in morning trading on the New York Mercantile Exchange.

The gains follow two days of steep declines.

Figures from the Energy Information Administration showed U.S. oil supplies fell by 5.9 million barrels. This is far above the 1.9 million barrels forecast by analysts surveyed by the energy research firm Platts.

However, gasoline stockpiles rose more than expected.