Oil rallied above $64 on Thursday on bullish U.S. inventory data and after OPEC ministers meeting in Vienna decided, as widely anticipated, to leave the group's crude output unchanged at 24.85 million barrels per day. Stories In Pictures Videos U.S. crude oil for July delivery was up $1.16 at $64.61 a barrel by 1520 GMT after having briefly touched $64.99, its highest level since mid-November. London Brent crude rose $1.33 to $63.83. U.S. crude stocks fell more than expected last week as refiners ramped up operations, while gasoline inventories dropped for the fifth week, the Energy Information Administration said in weekly data released Thursday. Commercial crude inventories fell 5.4 million barrels in the week ended May 22, the EIA said, dwarfing the 700,000-barrel decline analysts had forecast in a Reuters poll. "What we are seeing here is the demand side start to improve," said analyst Phil Flynn at Alaron Trading in Chicago. "Gasoline demand over the Memorial Day weekend is a critical point in judging the health of the U.S. economy. I don't think the increased demand over the holiday was a fluke." OPEC UNCHANGED Oil has climbed back from a low of $32.40 last December to its current level, and on Wednesday Saudi Arabia's Oil Minister Ali al-Naimi told reporters in Vienna the world was ready to cope with a barrel price range of $75-$80. On Thursday Naimi said that OPEC had decided to keep its output target unchanged. "Stay the course, that's the decision," Naimi said at the end on an almost two-hour meeting of the Organization of the Petroleum Exporting Countries. Analysts said the decision to leave output unchanged was expected and had been thoroughly priced in to the market beforehand. "This decision is going to be fairly market-neutral in the short run -- it's what the market was expecting," said Andrey Kryuchenkov, analyst at VTB Capital in London. "In the long-run, if they can stick to 80-85 percent compliance, it will be market supportive as inventories will start to come down -- as long as demand doesn't deteriorate further." STILL OVERSUPPLIED Analysts said oil's recent highs have followed resurgent global equity markets in spite of weak underlying fundamentals of excess supply and poor demand for refined petroleum products. "In the near term, oil will likely retain its high level of correlation in daily return with equities, but equally with (foreign exchange) as long as oil is kept off the market in storage," said BNP Paribas ( BNPQY.PK - news - people ) senior oil analyst Harry Tchilinguirian. "When that oil starts coming back, depressing the prompt, we can expect that relation to loosen." In Vienna, OPEC Secretary General Abdullah al-Badri said the oil market was still oversupplied, with around 130 million barrels of crude and refined products currently stowed in floating storage. Industry officials and analysts estimate a range of 100 million to 130 million barrels of crude oil stored at sea in 50 to 53 vessels, as sellers profit on oil for prompt delivery being cheaper than for future delivery.

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