Benchmark oil for December delivery was up 49 cents at $88.30 a barrel at early afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract added $1.09 to settle to $87.81 on Wednesday.
U.S. commercial crude inventories fell by 3.3 million barrels to 364.9 million barrels for the week ending Nov. 5, the Energy Department said Wednesday.
The amount of oil in storage remains above the average for this time of year, yet the oil price is now at its highest level since October 2008, when the global financial crisis was taking hold. Oil prices have risen about 11 percent this year, while crude supplies have increased by 11.5 percent.
The government also said gasoline inventories declined by 1.9 million barrels to 210.3 million barrels while demand over the past four weeks was up slightly, averaging 9.1 million barrels a day. That’s an increase of 1.8 percent from the year earlier period.
Oil prices have climbed steadily in recent weeks because the dollar has weakened against other currencies. That’s largely because of the Federal Reserve’s decision to pour $600 billion into a bond-buying program to stimulate the U.S. economy.
Since oil is priced in dollars, a weaker dollar makes it more of a bargain for buyers using euros or other currencies. Energy traders expect this to happen, so they buy oil when the dollar falls, boosting the effect.
Yet, oil was higher Wednesday even though the dollar was stronger as traders concluded the inventory decline was a sign of an improving economy. On Thursday the dollar fell against the euro and rose versus the yen.
In other Nymex trading in December contracts, heating oil added 1 cent to $2.45 a gallon and gasoline gained 5 cents to $2.24 a gallon. Nautral gas was up 7 cents at $4.11 per 1,000 cubic feet.
In London, Brent crude climbed 39 cents to $89.35 a barrel on the ICE Futures exchange.