Oil rose on Wednesday, supported by government data showing a drop in U.S. crude supplies, gains in the stock market and a weaker U.S. dollar.
Further gains came after the oil minister from Qatar said the Organization of the Petroleum Exporting Countries was unlikely to hike output soon.
U.S. crude settled 56 cents (U.S.) higher at $71.03 a barrel, having earlier traded down to $69. Brent crude rose 61 cents to settle at $70.85 a barrel.
U.S. crude inventories fell 3.9 million barrels in the week to June 12, according to data released by the U.S. Energy Information Administration, well above analysts expectations.
Gasoline demand in the world's top consumer, which has been battered by the economic crisis, rose over the four-week period ending last week, adding further support for prices.
"Demand is up 1.1 per cent against a year ago - that's almost normal demand growth," said Phil Flynn, analyst for Alaron Trading in Chicago A steep 3.4-million barrel rise in U.S. gasoline stocks in the midst of the summer driving season earlier dragged crude markets lower.
Support also came as gains in technology and biotech stocks helped push up the U.S. stock market. Hopes that the economic crisis may soon find bottom has raised expectations fuel demand could begin to rebound, pushing up crude prices.
"The crude oil market is getting price guidance co-operation from a weak dollar and equities, which has taken off some early losses," said Tom Knight, trader for Truman Arnold in Texarkana, Tex.
The U.S. dollar fell after tame U.S. inflation data dampened speculation the Federal Reserve would raise interest rates any time soon. The weaker dollar makes oil and other commodities cheaper for holders of other currencies.
Slumping demand sent oil off record peaks over $147 a barrel hit last July, prompting OPEC last year to agree to a series of production cuts to prop up prices.
Qatari Oil Minister Abdullah al-Attiyah told Reuters price gains in recent months were due to speculators more than fundamentals. He added that OPEC was unlikely to increase output soon despite concerns from some analysts that higher fuel costs could stall any global economic recovery.
"When you have a major player like Qatar saying we're going to keep production steady, that's supportive of the price and it's also a sign OPEC thinks the economy can handle $70 a barrel oil," said Alaron's Mr. Flynn.
U.S. President Barack Obama on Wednesday laid out his vision for reshaping U.S. financial regulation, including imposing regulation on over-the-counter derivatives.