Nymex crude oil futures surged to a fresh six-month high above $66 a barrel in London Friday, boosted by higher equities, a weaker dollar and lower U.S. crude inventories. "Oil continues its magnificent run on the back of dollar weakness and unabated risk appetite," says Andrey Kryuchenkov, vice-president of commodities research at VTB Capital. Meanwhile, "U.S. refinery runs are starting to look better while U.S. crude stockpiles are finally shrinking." At 1050 GMT, the front-month July Brent contract on London's ICE futures exchange was up $1.01 at $65.40 a barrel after touching a six-month peak at $65.43 a barrel. The front-month July contract on the New York Mercantile Exchange was trading $1.07 higher at $66.15 a barrel after earlier hitting a six-month high at $66.17 a barrel. The ICE's gasoil contract for June delivery was up $14.75 at $519.25 a metric ton, while Nymex gasoline for June delivery was up 181 points at 192.87 cents a gallon. Oil prices were buoyed by optimism over the global economy Friday as participants followed through on Thursday's gains with more buying. Oil has risen around 17% in the last 10 trading sessions. Strength in broader financial markets was lifting crude in the short term, as was a weaker dollar, participants said. "It is no puzzle as to why oil prices are rising despite weak current fundamentals," said David Hufton, managing director at PVM Oil Associates in London. "They are going up because speculators are hopeful that a bottom has been reached and an economic recovery is about to take place." Thursday's data from the U.S. Department of Energy showing a 5.4 million barrel decline in crude inventories suggested the global glut - which has weighed on prices in recent months - could be dissipating. While the data bolstered prices in the near term, market participants said they would search for more indications that demand - and by inference, economic activity - was starting to rebound amid the global economic slowdown. "Participants are perhaps starting to see the first signs of a meaningful inventory drawdown," said Edward Meir, an analyst at MF Global in New York. "It remains to be seen whether this destocking trend will continue." Meir warned oil demand was still relatively weak and said massive oil inventories were also being held in floating storage. The optimism pervading the oil market may be overdone, said analysts at KBC Market Services in the U.K. Although sentiment has been boosted in recent weeks, "demand is weak and showing little short term sign of improving," the analysts said.

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