Oil rose to $71 a barrel on Friday as investors focused on falling gasoline inventories in top consumer the United States and a regional drop in crude stocks.
A U.S. government report on Wednesday showed gasoline stocks fell 700,000 barrels last week and crude inventories at Cushing, Oklahoma, the delivery point for the U.S. crude benchmark, dropped 1.4 million barrels.
The inventory numbers are giving the pattern for the rest of the week, said Kevin Blemkin, an oil broker at Man Financial.
London Brent crude rose 56 cents to $71.08 a barrel by 1456 GMT. U.S. crude oil was up 68 cents at $70.25 after reaching its highest settlement since August 2006.
While nationwide U.S. crude stocks rose by 1.6 million barrels to a nine-year high, the drop at Cushing has supported gains for U.S. crude and helped narrow its discount to Brent to around $1 a barrel.
The U.S. crude benchmark has been trading at an atypical discount to Brent since February, weighed down by higher inventories after a spate of refinery outages cut demand.
U.S. refineries have resumed normal production rates following their return from maintenance, leading to the inventory drop at Cushing and prompting expectations of further declines.
The market is starting to price in higher crude runs in the U.S., which is going to lead to more stock draws, said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
Explaining the narrowing gap between Brent and U.S. crude, Lehman Brothers pointed to quality issues that were putting downward pressure on August Brent relative to the contract in other months.
The bank said in a research note that maintenance at the high quality Forties fields, which are part of the Brent contract, would lead to a higher sulphur content in August cargoes.
August Brent is likely to continue disconnecting itself from the rest of the Brent futures curve until the contract expires on July 16, Lehman analysts wrote.