Stockpiles fell 3.89 million barrels to 312.7 million barrels last week, the report showed. A 400,000 barrel gain was expected, according to a Bloomberg News survey. Prices may increase further because the Federal Reserve is expected to announce a quarter-point interest rate reduction to bolster economic growth.
Crude oil for December delivery rose $2.88, or 3.2 percent, to $93.26 a barrel at 10:43 a.m. on the New York Mercantile Exchange after touching $93.67. Futures climbed to $93.80 on Oct. 29, the highest since trading began in 1983. Oil is up 58 percent from a year ago.
Brent crude oil for December settlement rose $2.46, or 2.8 percent, to $89.90 a barrel on the London-based ICE Futures Europe exchange. Brent reached $90.49 a barrel on Oct. 29, the highest since trading began in 1988.
The Energy Department released its weekly report on petroleum stockpiles at 10:30 a.m. in Washington.
``When the dollar is weak, a lot of overseas investors seek a safe haven in commodities, such as gold and oil,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. ``Falling interest rates also have bullish implications for demand because it may boost economic growth. A weak dollar also cushions European consumers somewhat against higher prices.''
``Global demand for oil largely exceeds the production of non-OPEC countries and the difference is not matched by OPEC, so there is tension on the market,'' said Harry Tchilinguirian, an analyst at BNP Paribas in London. ``Oil-consuming countries will certainly be putting pressure on OPEC to increase output, but in the short term we don't anticipate a production increase above 500,000 barrels a day.''