Oil prices rallied on Wednesday as the United States revealed that its energy stockpiles had fallen last week, indicating increasing demand in the world's biggest economy.
New York's main contract, light sweet crude for delivery in January jumped $1.48 to $89.41 a barrel.
Brent North Sea crude for February advanced $1.15 to $109.99 a barrel in late London deals.
The US Department of Energy on Wednesday said stockpiles of heating fuel and crude oil both dropped last week. Inventories of US distillates, comprising diesel and heating fuel, slid 1.1 million barrels in the week to December 14, the DoE said.
Crude stocks fell by 1.0 million barrels, less than analyst expectations for a drop of 1.3 million.
Market confidence has been boosted also by hopes of a breakthrough in Washington on averting the "fiscal cliff" of tax hikes and spending cuts due to come into effect at the start of January.
The US economy will likely tip into recession if a new deal to cut the country's deficit with less swingeing measures is not found.
President Barack Obama and Republican House Speaker John Boehner have in recent days stepped up negotiations, with both sides narrowing their differences and providing concessions on spending and taxes.