Oil rose 2 percent on Wednesday to touch a six-month high over $62 a barrel as government data showed a steep drop in U.S. crude and gasoline inventories ahead of the summer driving season.
U.S. crude rose $1.39 to $61.49 a barrel by 12:49 p.m. EDT after hitting a six-month high of $62.14. London Brent traded up $1.23 to $60.15 a barrel.
U.S. crude oil and gasoline stockpiles fell sharply last week, according to a U.S. Energy Information Administration report, with crude down 2.1 million barrels and gasoline off 4.3 million barrels.
Week over week, the report is very bullish, said Phil Flynn of Alaron trading in Chicago.
There are still questions over the economy, whether these prices can be sustained, which is why we will probably return to the stock market to see if there are any signs of economic help.
U.S. stocks pared early gains in afternoon activity as a pullback in financial shares offset positive broker comments on bellwethers McDonald's and Procter & Gamble. <.N>
Stock market strength has supported crude prices in recent months, helping lift them from lows below $34 a barrel on optimism any rebound in the economy could spur fuel demand.
Weak demand has sent crude prices off record highs over $147 a barrel struck last July.
Fire struck gasoline making units at two U.S. refineries this week, triggering a roughly 8 percent spike in U.S. gasoline futures on Tuesday as the United States gears up for the Memorial Day holiday, traditionally the start of summer driving season.
Data from Japan showed gasoline inventories at their lowest level since September 2007 and kerosene stocks declining to a near three-year low in part due to strong sales.
Further strength has come from unrest in OPEC member Nigeria, Africa's top oil and gas exporter. Shooting broke out in the Nigerian oil port city of Warri on Wednesday following days of military helicopter and gunboat raids on militant camps in the surrounding creeks.
Top Italian oil and gas company ENI SpA
The Algerian oil minister said the Organization of Petroleum Exporting Countries (OPEC), which has agreed to cut 4.2 million bpd of output since September to prop up prices, has no reason to cut output again when it next meets on May 28.
(Reporting by Matthew Robinson, Gene Ramos, Robert Gibbons, Edward McAllister in New York; Christopher Balwin in London; Editing by David Gregorio)