Oil prices rose above US$62 a barrel on Friday after a report from the International Energy Agency (IEA) raised concerns about the market's ability to meet an expected jump in demand for oil-based products.
"Products are tugging crude oil to the upside when the crude market seems pretty well supplied for now," said Tim Evans, an energy analyst at Citigroup Global markets. "Gasoline is very tight, crude is overabundant and the refineries are sitting in between."
Earlier on Friday, the IEA said OPEC needs to increase output soon. It expressed concern over the ability of refiners and OPEC's willingness to meet an expected jump in oil product demand of 1.6 million barrels a day next month.
Suggestions by OPEC officials that there is no need to boost its production levels "appear wide of the mark" the agency said.
"Steady output at current levels would lead (to OPEC) undershooting our calculated range for the call on its crude, and thus tightening stocks further," the IEA said.
Light, sweet crude for June delivery rose US$0.56 to settle at US$62.37 a barrel in afternoon trading on the New York Mercantile Exchange. On London's ICE Futures exchange, June Brent crude finished at US$66.83 a gallon, up US$1.04.
The Energy Information Administration reported that gasoline stocks rose an average of 400,000 barrels last week, the first increase in 13 weeks. But a closer inspection showed much of that increase stemmed from a 1.1-million barrel increase in inventories on the West Coast only, not across the country.
Gasoline supplies in the last two weeks are at the lowest levels since October 2005 following Hurricanes Katrina and Rita, Evans said.
The news caused gasoline futures for June delivery to jump 9.52 cents to US$2.3261 a gallon on Thursday, and the U.S. national average price of gas at the pump rose to US$3.037 a gallon (US$0.80 a liter). Gas futures gained US$0.026 to settle at US$2.3521 a gallon.