Oil prices rallied this evening after an unexpected drop in crude stockpiles in the US, the world's biggest energy user.
Markets also reacted to news that the OPEC oil producers' cartel forecast modest growth in world oil demand this year and an announcement by Anglo-Dutch oil group Shell that it had cut its crude output in Nigeria to allow repairs.
New York's main contract, light sweet crude for delivery in May, jumped $1.84 to $85.89 a barrel. Brent North Sea crude for May advanced by $1.51 to $86.23 dollars in late London trading.
The US Department of Energy said today that US crude inventories dropped by 2.2 million barrels last week. Analysts had forecast an increase of 1.1 million barrels.
Earlier, OPEC held steady its forecast for oil demand growth. 'The world economic pulse is the variable that will determine the fate of global oil demand this year,' the Organisation of Petroleum Exporting Countries said in its April report.
'Economic activities in the US are playing the wild card for world oil demand growth. Given the slow world economic recovery, world oil demand growth is forecast in 2010 at 0.9 million barrels per day (bpd) or 1.1% to average 85.2 million bpd,' the report said.
The Paris-based International Energy Agency yesterday raised its forecast for oil demand but warned about potential risks to the economic recovery posed by high energy costs. Oil prices above $80 a barrel could hamper economic recovery, the IEA said.
Meanwhile, Shell said it had halted 100,000 barrels a day of output at Nigeria's EA offshore field to carry out repairs of key equipment. It said the equipment in question was scheduled to be overhauled in May this year, but bad weather, including a storm on March 26, had forced the exercise to be brought forward.
Shell, one of the top oil operators in Nigeria has seen much of its output slashed because of unrest in the country's restive oil-producing region over the past three and a half years.
