Oil prices shot to within a whisker of $65 today as they notched up six-month highs after the US reported a sharper-than-expected drop in crude inventories.
Prices also rallied as the US currency dropped against the euro - making dollar-priced oil cheaper for holders of other currencies - and after the OPEC oil cartel said it was maintaining output at current levels.
New York's main futures contract, light sweet crude for delivery in July, jumped as high as $64.99 a barrel, a level last seen on November 10. Later it stood at $64.41, up 96 cents from yesterday's close.
London's Brent North Sea crude for July was up $1.20 at $63.70 after an intra-day peak of $64.22, which was the highest level since November 5.
The US Department of Energy today said that US crude stockpiles tumbled by 5.4 million barrels last week, while analysts had expected a drop of only 500,000.
The DoE added that petrol stockpiles fell 600,000 barrels, far less than the 1.7 million forecast by analysts. Petrol inventories are being closely watched amid the start of the summer vacation period in the US that sees Americans traditionally hit the roads in vast numbers.
Earlier today, the OPEC crude exporters' group decided to maintain current output levels as expected. The Organisation of Petroleum Exporting Countries left its production target at 24.84 million barrels a day following a meeting in Vienna.
Oil prices had already surged yesterday on the back of buoyant equities and OPEC comments that strengthened expectations of economic recovery and higher energy demand, traders said.
OPEC believes the market is oversupplied but it seems satisfied with oil prices after a rally in the last two weeks that has taken crude above $60 a barrel.
The group that pumps 40% of world oil had cut its production target three times late last year to help stabilise prices that tumbled from record highs above $147 a barrel in July 2008 to $32.40 in December.
