Men work on an oil rig at Sinopec's Shengli oil field in Dongying, Shandong province, China. Image Credit: Reuters

London: Oil rose in New York, trading near a five-month high, after industry data indicated a sharp decline in American gasoline inventories last week.

West Texas Intermediate crude futures increased 0.6 per cent, while gasoline climbed as much as 1.5 per cent to the highest since October. The American Petroleum Institute was said to report on Tuesday that gasoline stockpiles fell by 7.08 million barrels. That may change expectations for more comprehensive government data due later today, which had been forecast to show a smaller drop.

“The API reported much bigger drawdowns in product than expected,” said Warren Patterson, senior commodities strategist at ING Bank NV.

Oil has climbed more than 40 per cent in New York this year as the Organization of the Petroleum Exporting Countries has reduced production to prevent a global surplus, and as the group’s supplies are further curbed or threatened by political troubles in members Venezuela, Iran and — most recently — Libya.

But the gains remain capped by fears over the strength of the world economy, which the International Monetary Fund predicts will see its weakest growth this year since the financial crisis.

West Texas Intermediate for May delivery climbed 43 cents, or 0.7 per cent, to $64.41 (Dh237) a barrel on the New York Mercantile Exchange as of 10:28am in London. The settlement price of $64.40 on April 8 was the highest closing level since October 31. Prices continue to remain above the 200-day moving average after they breached that level for the first time since October earlier this month.

Brent for June settlement rose 40 cents to $71.01 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $6.63 to WTI for the same month.

Gasoline’s boost to the market may be short-lived, however, as the inventory pullback has more to do with “low US refinery runs rather than strong US demand,” said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland.

“When refinery capacity utilisation starts to increase and the jump in prices at the pump starts to have a greater impact on US consumption,” support from gasoline could fizzle, Jakob said.

Fighting near the Libyan capital continued, forcing the United Nations to postpone an international peace conference to reconcile feuding factions and threatening to plunge the country back into civil war.

Forces loyal to Libya’s eastern military commander Khalifa Haftar have pushed their offensive on the country’s critical northwestern region in recent days, where they have run into opposition from militias allied with the internationally recognised government of Prime Minister Fayez Al-Sarraj. While Libyan oil production has risen in the last few years, it has been frequently disrupted by civil strife.

“After conflicts flared in Libya, uncertainties have increased on the supply side,” said Hong Sungki, a commodities trader at NH Investment & Securities Co. in Seoul. “While there are concerns over global growth, the impact is shrinking as we see more positive economic indicators from the US and China.”