Oil prices briefly pushed above $62 a barrel on Wednesday to touch a new six-month high on bullish inventory data and a spate of refinery accidents in the United States, in spite of weak market fundamentals.
U.S. crude oil and gasoline stockpiles fell sharply last week, the U.S. Energy Information Administration said on Wednesday, with crude down 2.1 million barrels and gasoline falling by 4.3 million barrels from last week.
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. crude rose $1.47 to $61.57 a barrel by 11:03 a.m.a EDT after briefly touching $62.14, and London Brent rose $1.26 to $60.17.
Fire struck gasoline making units at two U.S. refineries this week, triggering a roughly 8 percent spike in U.S. gasoline futures that will likely filter through to retail pumps just as the summer driving season begins.
Unrest in OPEC member Nigeria, Africa's top oil and gas exporter, also drove up prices this week. Security forces clashed with militants on Tuesday near an oil flow station operated by Chevron
Italy's biggest oil and gas company ENI SpA
Oil prices have been on an upward trend since mid-April on equity-led rallies. They have recovered from below $33 in December after a plunge from record highs above $147 in July.
U.S. gasoline is more than likely still contracting, even though we are approaching the Memorial Day weekend, said Harry Tchilinguirian, senior oil analyst at BNP Paribas.
The weekly data, from a growth perspective, is not showing any signs of improvement.
Commodities markets have closely tracked stock markets in recent months as dealers seek signs of economic health.
Tokyo's Nikkei average <.N225> rose 0.6 percent, shrugging off data that showed Japan suffered a record contraction in the first quarter.
Oil data out of Tokyo, center of the world's No. 2 economy, also 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.
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 more when it next meets on May 28.
If the price stays at this level ... I don't think there will be any reason to cut, Algerian Energy and Mines Minister Chakib Khelil said in Buenos Aires on Tuesday.
(Additional reporting by Edward McAllister in New York, editing by Keiron Henderson)