NEW YORK: Oil prices rallied Wednesday as data showed a fall in US crude oil and gasoline inventories and the US Federal Reserve vowed to maintain ultra-low interest rates.
New York's main contract, West Texas Intermediate (WTI) light, sweet crude for delivery in August, gained $1.24 to close at $95.41 a barrel.
In London, Brent North Sea crude for August delivery jumped $3.26 to $114.21 a barrel on the IntercontinentalExchange.
"We saw a decent drawdown in crude stocks, and gasoline demand wasn't too bad. That's why we are seeing the prices rally," said Matt Smith, an analyst with Summit Energy.
"We also had comments from (Federal Reserve chairman Ben) Bernanke that they are going to maintain the monetary stimulus to support the economy," he added.
Prices rose after a weekly report from the US government's Department of Energy (DoE) suggested that demand for oil in the world's largest economy was stronger than anticipated.
Crude reserves sank 1.7 million barrels aaaaain the week ending June 17, the DoE said, much more than forecasts for a drop of 800,000 barrels.
Gasoline stockpiles fell 500,000 barrels, it announced. That confounded forecasts for a gain of 800,000 barrels, according to analysts polled by Dow Jones Newswires.
Gasoline figures are closely watched amid the peak-demand driving season in the United States, with many Americans hitting the road for their summer holidays.
Separately, the Fed's rate-setting body, the Federal Open Market Committee, announced that it would keep the federal funds rate at near-zero levels "for an extended period" to boost the flagging US economic recovery.
Low interest rates tend to drive up the price of dollar-priced crude oil by weakening the dollar, and by stimulating economic growth, which in turn boosts demand for gasoline.
