LONDON: US oil prices rallied further on Thursday, boosted by an unexpectedly sharp drop in US crude stockpiles which signalled strong demand in the world's top consuming nation, analysts said.
New York's main contract, West Texas Intermediate (WTI) for delivery in January, hit $97.72 -- the highest point since late October. It later stood at $97.23, up 33 cents from Wednesday.
Brent North Sea crude for January meanwhile was unchanged at $111.88 in late morning deals in London.
The WTI contract had jumped on Wednesday after the US government's Department of Energy (DoE) said American oil inventories tumbled 5.6 million barrels to 385.8 million barrels in the week ending November 29.
That surprised traders because market expectations had been for no change.
"The (DoE) report ... showed the first fall in 11 weeks of around 5.6 million barrels, which caused WTI to jump," said Inenco analyst Lucy Sidebotham.
"This showed stronger oil demand in the US," she added.
Prices gained further support this week from news that part of the US Keystone pipeline would open next month, easing oversupplied inventories.
Meanwhile on Thursday, traders worried about an oversupply in Middle Eastern crude, which could push down prices along with rising US shale oil production.
The Organization of Petroleum Exporting Countries (OPEC) on Wednesday agreed to keep its production ceiling unchanged at 30 million barrels a day (bpd).
However, pledges by its members Iraq and Iran to boost output in 2014 raised concerns about potential oversupply, especially if Libyan oil production is restored and US shale oil output continues to increase.
Iraq's oil minister Abdelkarim al-Luaybi this week said his country hoped to boost exports to 3.4 million bpd next year from current levels of about 2.4 million barrels.
Iran, where oil exports have been slashed to 1.2 million barrels due to international sanctions imposed on it for its disputed nuclear programme, could immediately ramp up exports to 4.0 million barrels if the sanctions are lifted, according to its oil minister Bijan Zanganeh.
"Admittedly, this decision had been anticipated prior to the meeting - nonetheless, there are signs of disagreement within OPEC concerning how best to react when Libya and Iran return to the oil market," said Commerzbank analysts in a note to clients.
"Unless oil production is scaled back in the other OPEC countries, there will then be a risk of oversupply and sliding prices," they warned.
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