Oil rose near US$59 on Thursday after a larger-than-expected draw in US fuel stocks and on signs that Opec may cut production again next month.
US light crude climbed 20 cents to US$58.96 a barrel by 1501 GMT, adding to a 48-cent gain the previous session.
London Brent
crude rose 36 cents at US$60.97.
Distillates stocks in the US fell by 3.6 million barrels last week, nine times more than forecasts, while petrol supplies dropped by an unseasonably high 3.7 million barrels, the Energy Information Administration (EIA) said on Wednesday.
"The strong demand in petrol and distillates is very surprising," said Tetsu Emori, chief strategist at Mitsui Bussan Futures.
"If the trend lasts a few weeks, prices may be taken higher. But crude oil inventories are still very high so the potential upside could be limited."
Total US oil demand is up 4.8 per cent from a year ago, the data showed. Demand for distillates is up 9.5 per cent.
US crude oil stocks rose 1.3 million barrels, the third consecutive weekly rise, as refinery utilisation unexpectedly slipped due to unplanned outages and maintenance.
While stocks generally remain above historical norms, some analysts warned that their steep fall and a possible further cut in Opec production may quickly shift market sentiment.
The fall in inventories could accelerate. The latest weather forecasts point toward slightly colder-than-normal conditions in the eastern United States this year, AccuWeather said in an updated outlook on Wednesday.
"The market is ultimately going to face over-tightening, and the longer it takes before prices make a more significant move up, the more vicious is likely to be the whiplash when they do start to move," Barclays Capital said.
- REUTERS
