The price of oil rose above $94 per barrel Thursday following news of a big drop in U.S. oil supplies.
However, analysts doubted that the latest move higher was the start of something dramatic.
By early afternoon in Europe, benchmark oil for July delivery was up 49 cents to $94.23 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 43 cents to close at $93.74 a barrel the day before.
Already posting gains thanks to falling U.S. crude stockpiles, oil prices also received support from the latest government unemployment update. The Labor Department said Thursday that the number of Americans seeking unemployment benefits fell 11,000 last week to a seasonally adjusted 346,000, a level consistent with steady job growth. The claims figures come a day ahead of the monthly payrolls report, which often sets the tone across financial markets for a week or two after its release.
On Wednesday, the Energy Department said U.S. crude oil inventories shrank by 6.3 million barrels in the week ending May 31, thanks to a sharp drop in imports. Analysts expected a drop of 1 million barrels. Separately, the American Petroleum Institute said stockpiles shrank by 464,000 to 387.3 million barrels. Tighter supplies tend to push oil prices higher.
"For the first time since January 1997, the U.S. produced more crude oil than it imported last week," said analysts at Commerzbank in Frankfurt. "In view of the comfortable supply situation and growing U.S. oil production, supply shortages on the global oil market are not likely."
Oil prices were expected to stay within a tight range for now, as supplies are ample and demand remains restrained by a tepid global economic recovery.
"The market has been stuck in neutral for some time and it's hard to see how any analyst can be as so bold to see a major move on the chart forming in the near term," said Carl Larry of Oil Outlooks and Opinions in a market commentary.
Brent crude, a benchmark for many international oil varieties, was up 18 cents to $103.22 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Wholesale gasoline rose 0.29 cent to $2.8259 a gallon.
— Heating oil added 0.06 cent to $2.856 per gallon.
— Natural gas was down 3.3 cents to $3.968 per 1,000 cubic feet.
Pamela Sampson in Bangkok and Christopher S. Rugaber contributed to this report.