Oil rose towards $71 a barrel on Thursday after a surprisingly steep decline in U.S. gasoline stocks revived supply worries during the height of the summer driving season.
London Brent crude, now a better gauge of global prices than U.S. oil, was up 17 cents at $70.70 a barrel by 1101 GMT, after rising 35 cents on Wednesday.
U.S. crude gained 45 cents to $69.42 a barrel, following an overnight spike of $1.20.
A slowdown in gasoline imports drained inventories of motor fuel in the world's top consumer by 700,000 barrels last week versus an expected build of 1.2 million barrels, U.S. government data showed on Wednesday.
A year-on-year deficit of distillate stocks, which include heating oil, deepened after supplies fell 2.3 million barrels.
Price gains were tempered, however, by rising stockpiles of crude oil -- which hit a fresh nine-year high -- and higher operating rates at U.S. refiners.
The fall in gasoline stocks is due mainly to a lack of imports, not domestic production, which has been ramping up, said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia.
With the refineries coming back online, it seems unlikely that the inventories will keep falling.
In terms of U.S. crude, analysts saw $70 as a pivotal level.
Last week lower refinery runs were bullish, this week higher refinery runs are bullish, said Olivier Jakob of Petromatrix.
In our view, technical trading around the $70/barrel barrier remains the predominant driver.
Oil, along with other commodity and financial markets, also regained its poise after falling earlier this week on concerns that troubles in U.S. mortgage securities could raise borrowing costs and make investors avoid higher-risk markets.