World oil prices climbed this afternoon after US government data showed a surprise fall in US crude stocks as demand for refined products held strong.
US light crude futures were trading 84 cents higher at $54.60 after brushing a session peak of $55. London Brent crude was 73 cents higher at $53.86 a barrel.
The US Energy Information Administration, in its latest weekly report today, said that crude stocks had fallen by three million barrels to 330.8 million, compared with analysts' forecasts for a rise of 200,000 barrels.
Petrol stockpiles also fell by 100,000 barrels, compared with expectations of a 900,000-barrel rise, though distillate stockpiles rose by 1.3 million barrels, exceeding forecasts of a 1.1 million barrel build.
The EIA also said demand growth for diesel, part of the distillate pool, over the past four weeks was 6.6% from the same time last year. Petrol demand growth was 2.4%.
Many analysts have linked a rally that took prices to a six-week peak of $55.55 for US crude to concerns about stocks of refined products, especially distillates, rather than to overall supplies.
Analysts are concerned increased consumption of distillates like diesel over the summer months - fuelled by European motorists, US truckers and Chinese businesses - will leave refiners struggling to satisfy winter demand for heating oil, which is also part of the distillates group.
Overall crude stocks are still near six-year highs and 29 million barrels higher than the same time a year ago. They have been boosted by increased output from the Organisation of the Petroleum Exporting Countries (OPEC), which is producing at the highest levels in almost 25 years.
Leading producer Saudi Arabia has tapped spare capacity to increase volumes of oil on the market, and with more crude immediately to hand, it is commercially viable for refiners to store oil.
But with prices still stubbornly above $50 a barrel, OPEC is considering increasing its official ceiling when it meets in Vienna next week, officials said.
'If the price will continue as it is now, I will propose as president to increase by 500,000 barrels per day for the ceiling,' OPEC President Sheikh Ahmad al-Fahd al-Sabah said yesterday.
He said such an increase could have a psychological impact on the market, but that it would not add any extra oil as it would merely raise cartel's formal production limit to 28 million barrels per day - about what they are pumping now.
