Oil jumped more that $2 a barrel after a sharp drop in U.S. gasoline stocks fuelled concerns of tight supplies ahead of the summer driving season in the world's biggest consumer.
Natural gas inventories rose 17 billion cubic feet, according to the weekly EIA report out this morning. Traders were expecting a small decline in natural gas stocks.
On the New York Mercantile Exchange, May crude settled up $2.08 or 3.5% at $61.69, the highest settlement since March 7th. With today's gains, crude is back in positive territory for the year with a 1.0% gain since January 1st.
The price of U.S. oil has recovered from a 20-month low of $49.90 hit in January, partly because of OPEC supply cuts, but remains well below a record $78.40 reached last July.
Refinery snags, early maintenance and robust demand growth in the United States have drained gasoline stocks to 7% below early February levels. Inventories fell last week by 3.4 million barrels.
But some analysts say worries of a U.S. summer gasoline crunch may prove unfounded as rebounding refinery production and imports from Europe should ensure adequate supplies.
A late Wednesday stock market rise also supported oil.
"There was the monster rally in the stock market after the NYMEX session had closed on Wednesday," said Tim Evans, energy analyst at Citigroup Global Markets. "And Thursday often has the market taking a second look at the (inventory) numbers ... the product draws were significant."
Heating oil broke a three-day losing streak with a gain of 5.34 cents or 3.2% to settle at $1.7180. It was the biggest one-day gain since February 8th and the highest settle price in two weeks. Natural gained 16 cents or 2.2% to $7.320 -- the best settle since March 7th.
While gasoline's buoyancy has helped boost crude prices, analysts say a supply cut of 1.7 million barrels a day by the Organization of the Petroleum Exporting Countries (OPEC) is also underpinning the market.
"OPEC has regained an element of control over the market," said Tony Dolphin, economist at Henderson Global Investors.
He said lower-than-expected supplies from outside OPEC, particularly from Russia, plus a reasonable level of production discipline within OPEC, seemed to be enough to hold prices around $60 for now.
U.S. crude has traded between $58 and $62 a barrel since early February, a range considered acceptable by OPEC.
"Prices today we believe are reasonable. We hope these prices will stay in the level where they are, between $50-$60 a barrel," OPEC research head Hasan Qabazard said.
OPEC, source of more than a third of the world's oil, agreed last week to keep current crude supply curbs in place.
But OPEC ministers have not ruled out further action on supply before September, their next scheduled meeting.