Benchmark oil for February delivery rose 43 cents to $90.25 in midday trading on the New York Mercantile Exchange.
In its weekly petroleum report, the Energy Department's Energy Information Administration said crude supplies dropped by 5.3 million barrels last week from the week before. That's more than twice the decline expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos. EIA said gasoline supplies grew by more than 2 million barrels.
"Traders should not be fooled by a big draw from today's DOE data," said Stephen Schork, editor of the Schork Report newsletter. While shrinking oil inventories could help support higher prices, he notes that total supplies remain more than 10 percent above the 2004-2008 period.
Energy consultants Cameron Hanover said oil prices have been climbing and pulling up gasoline prices because investors are optimistic about the US economy. Recent developments like the extension of tax cuts and the Fed's bond-buying stimulus program have convinced many that the economy will improve and, with it, demand for oil and gas.
The economic news Wednesday did not throw much cold water on that. The Commerce Department said GDP rose at an annual rate of 2.6 percent between July and September, slightly below what analysts expected but an improvement from an earlier estimate. And the National Association of Realtors said sales of previously occupied homes rose almost 6 percent in November.
In other trading on the Nymex, heating oil added 0.63 cent to $2.5227 a gallon, gasoline gained 1.11 cents at $2.4096 a gallon and natural gas lost 3.9 cents at $4.020 per 1,000 cubic feet.
In London, Brent crude rose 39 cents to $93.59 on the ICE Futures exchange.
Meanwhile, world stocks advanced on Wednesday to two-year highs on growing optimism about global economic growth while the euro slumped to near-lifetime lows against the Swiss franc on Portugal and Greece debt warnings.
The euro recouped some losses versus the Swiss franc. But the single currency remained near its weakest level since launching in 1999 after Moody's warned it may cut Portugal's credit rating and Fitch said it may downgrade Greece — reminders that euro zone debt problems can still flare.
US investor sentiment has been bullish approaching 2011, with stocks on a tear in December as money managers reallocated capital, anticipating improving economic data and robust corporate earnings, according to a Reuters poll.
European shares hit a fresh 27-month high and US equities followed in kind, extending four days of gains that drove the S&P 500 to levels not reached since before Lehman Brothers went bankrupt two years ago.
With moves exaggerated by thin pre-holiday trade, Europe's FTSEurofirst 300 index tacked on 0.2 percent to close at 1,147.61, boosted by a 9.1 percent surge in ARM Holdings, which supplies microprocessors to Microsoft. The software giant is developing a new version of its operating system.
On Wall Street, the Dow Jones Industrial Average gained 27.36 points, or 0.24 percent, to 11,560.52. The Standard & Poor's 500 Index added 4.02 points, or 0.32 percent, to 1,258.62. The Nasdaq Composite Index rose 4.11 points, or 0.15 percent, to 2,671.72.
US Treasury prices trimmed gains in light trading after the Federal Reserve completed its last purchases until next week in the effort to spur US economic recovery. The benchmark 10-year US Treasury note declined 6/32 points in price, yielding 3.3265 percent.
The ratings warnings on smaller debt-laden euro zone countries sent the single currency stumbling not only against the franc, but also against the generally steady dollar.
The euro nudged lower against the dollar, down 0.08 percent at $1.3085. The dollar held flat against a basket of major currencies and declined 0.23 percent against the Japanese yen at 83.54.
