Oil prices climbed to a fresh five-week high above $55 today as the market brushed aside data showing a fresh build in US crude stocks and fixed its attention on relatively slim supplies of diesel and heating oil.
US crude oil futures rose 50 cents to $55.10 a barrel, while London IPE Brent crude was 51 cents higher at $53.78 a barrel.
The gains added to a surge of more than $2.50 yesterday that was led by heating oil and other refined products.
"The funds realised that the gasoline was not that supportive in the US market, so they turned to the next driver, and that's heating oil," said Frederic Lasserre at Societe Generale in Paris.
US heating oil gained another 4.60 cents to $1.5860 a gallon after a six percent rise yesterday.
US government inventory data released today showed distillate supplies, including heating oil, had risen by 700,000 barrels to 106.4 million, much less than analysts' forecasts for a 1.4 million-barrel increase.
Gasoline stocks rose by 1.3 million barrels to 216.7 million barrels, above analyst forecasts for a 300,000-barrel rise, while overall crude stocks rose 1.4 million barrels to 333.8 million barrels, far in excess of predictions that crude inventories would hold steady.
Overall crude inventories are very close to the highest levels for six years and stand 32.6 million barrels higher than the same time last year.
Gasoline inventories are also 12.7 million barrels higher than a year ago, but distillates, including heating oil, diesel and jet fuel, are slightly behind year-ago levels, which has led to an unseasonably early shift in trader attention from gasoline to heating oil and other distillates.
Refineries usually produce more gasoline and less of other fuels during spring to meet summer driving demand, which has generated concern that distillate stores will not build sufficiently ahead of their peak demand season late this year.
At the same time, US distillate demand growth has been running at more than three percent, outpacing that for gasoline or crude. Analysts say this is partly because of higher diesel use from truckers transporting Chinese products to markets from the West Coast and rising jet fuel consumption from airlines.
Overall crude stocks have been boosted by hefty output levels from the Organisation of the Petroleum Exporting Countries (OPEC) that produced more than 30 million barrels per day of crude oil last month, its highest level in 25 years.
Several OPEC ministers have predicted there will be no change in output policy when the cartel meets in Vienna on June 15 and that it will keep output levels high to try to boost stocks ahead of strong fourth quarter demand.