Oil prices jumped more than 10 percent on Tuesday on signs Saudi Arabia had made substantial cuts in its crude exports and as global financial markets rallied.
Saudi Arabia has reduced exports after OPEC agreed last month to lower output, according to trade sources, with some estimating the world's top exporter had cut shipments by around 900,000 barrels per day from a peak in August.
U.S. light, sweet crude rose over $6.62, or 10.36 percent, to settle at $70.53 a barrel.
London Brent crude was up more than $6 at near $67 a barrel.
Crude prices have plummeted from a record above $147 a barrel in July as the global credit crisis has hit the wider economy, dampening fuel demand in major consumer nations, including the United States.
The steep drop prompted the Organization of Petroleum Exporting Countries to agree to reduce output by 1.5 million bpd at an emergency meeting last month, and some members have called for additional reductions.
"Saudi Arabia has told major oil companies that it will restrict the volume they can load this month, answering skepticism about the kingdom's compliance with OPEC's Oct. 24 deal to cut output," Mike Fitzpatrick, vice president at MF Global, wrote in a research note.
U.S. stocks climbed further on Tuesday as the presidential election got under way, with investors picking up shares trading around five-year lows amid further signs of easing in global credit markets.
Strong earnings reports from MasterCard, the world's second largest card network, and Archer Daniels Midland improved optimism about consumer spending and pricing power.
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Democrat Barack Obama and Republican John McCain faced the verdict of U.S. voters after a long and bitter struggle for the White House, with Obama holding a decisive edge in national opinion polls.
In addition to Saudi Arabia, other OPEC members were also showing signs of throttling back output.
The United Arab Emirates has reduced its production to around 2.3 million bpd from around 2.5 million bpd, a top state oil company official said on Tuesday.
Algeria was reducing oil output by 71,000 bpd in line with OPEC's supply cut decision, the Algerian official news agency APS said on Tuesday, quoting the country's Energy and Mining Ministry.
Qatar has cut exports to Asia by about 40,000 bpd, effective this month, Energy Minister Abdullah al-Attiyah told Reuters.
A poll of analysts ahead of U.S. weekly government inventory data forecast U.S. crude oil stocks rose by 1.1 million barrels last week. The analysts predicted a rise of 1.3 million barrels in distillate inventories and a decline of 1 million barrels in gasoline stocks.