The price of oil pushed above $105 a barrel today after a report indicated that US crude stockpiles fell by far more than expected last week.

This is a potential sign of growing demand in the world's largest economy.

In Europe, benchmark crude for August delivery was up $1.61 to $105.14 a barrel in electronic trading on the New York Mercantile Exchange.

Oil was trading at its highest price since early May 2012.

Brent crude was up 49 cents to $108.30 on the ICE Exchange in London.

The advances came after figures from the American Petroleum Institute, an industry group, reportedly found that US crude inventories last week fell by 9 million barrels.

This was much more than the 3.8 million expected in a survey of analysts by Platts, the energy information arm of McGraw-Hill.

The US Energy Department releases its weekly report on inventories of crude oil and refined fuels - the market benchmark -later today.

A drop in supplies would suggest stronger demand and underline the signs of economic recovery shown in last week's stronger than expected US hiring report.

A report from the Organisation of Petroleum Exporting Countries forecasting rising global demand in 2014 also helped boost prices. The Vienna-based group said it expected additional global demand to reach 1 million barrels a day next year, compared to an annual increase of around 800,000 barrels a day in 2013.

"Next year's forecast for world oil demand is subject to uncertainties linked closely to the pace of the recovery in some major economies, particularly the US and euro zone, and GDP growth in China," OPEC said in its monthly report on oil markets.

"In addition, oil demand growth in 2014 could be capped by the implementation of policies targeting energy efficiency in transportation, as well as subsidies in some countries,'' it added.

At the same time, OPEC said demand for crude from its members would be slightly lower in 2014 than now, dropping to an average of 29.6 million barrels a day in 2014 from 29.9 million barrels a day this year. The difference is expected to be made up by supplies non-OPEC producers.

Oil prices were also supported by a weaker dollar - which makes crude cheaper for traders using other currencies - and the political crisis in Egypt. While Egypt is not an oil producer, it controls the Suez Canal, a critical channel for oil and gas shipments from the Middle East.