Oil prices rose for the third day and topped $71 a barrel today, as an industry report showing a small drawdown in US crude stockpiles last week fed optimism for a recovery in energy demand.
A second day of gains for Asian shares on growing confidence in a strengthening global recovery gave oil prices an extra lift.
US crude for November delivery rose 52 cents to $71.40 a barrel, adding to yesterday's gains of 47 cents. London Brent crude rose 61 cents to $69.17.
Today's oil gains followed a report by the American Petroleum Institute saying crude stocks fell 254,00 barrels in the week to Octpber 2, defying forecasts for a 2.2-million-barrel increase in a Reuters poll of analysts.
Distillate stocks fell 2.9 million barrels, countering expectations for a 300,000-barrel build, while gasoline stocks rose 544,000 barrels, against estimates for a 1.0-million-barrel increase.
The API report is seen as a precursor to the more authoritative data issued by the US Energy Information Administration (EIA), which will be released later today.
The EIA also raised its global oil demand estimate by 170,000 barrels a day for the fourth quarter and said it expected consumption to rise by 1.1 million bpd next year, versus earlier expectations of a 910,00 bpd rise.
Over the last two weeks, oil has rebounded from an 11-week low of around $66 in late September back towards the $70-level, but some analysts caution it could lose its footing in the near term.
After having jumped about 40 percent in the second quarter, oil prices have squeezed out a gain of only 1 per cent in the September quarter, trading in a band of between $65-$75.
While the global economy is healing from its worst financial crisis since the Great Depression, the economic recovery, along with energy demand, is still fragile, analysts have said.
A US Federal Reserve official said on Tuesday that while the US economy was clearly rebounding, it was too soon to begin to withdraw the Federal Reserve's massive support.
Asian shares pushed up about 1.4 percent today, with Taiwan's benchmark index nearing a 16-month high, as growing confidence about the global economic outlook boosted resource and financial companies.
However, the US dollar was again under pressure, with gold trimming some gains but still hovering near the all-time high of $1,043.45 hit yesterday.
Reuters