Oil prices surge on drop in US gas stocks

New York oil prices gained more than $2 following an unexpected drop in US gasoline inventories and speculation the European Central Bank will soon cut interest rates.

Benchmark West Texas Intermediate for June delivery gained $2.25 on the New York Mercantile Exchange to settle at $91.43 a barrel, the highest level since April 11.

In London, Brent crude for June delivery rose $1.42 to $101.73 a barrel.

The US market reacted strongly to "the big drop in gasoline inventory which was a bit of a surprise," said Michael Lynch of Strategic Energy and Economic Research.

Stocks of gasoline fell 3.9 million barrels, almost 10 times more than expected by analysts surveyed by Dow Jones Newswires.

"Probably that is temporary," Lynch said of the gasoline inventories.

"There have been a number of refinery problems on the Gulf Coast, that explains the bulk of it. We will probably see it go back next week though."

US refinery utilization fell to 83.5 percent compared with 86.3 percent in the prior week.

The week's gain in crude inventories, which at 900,000 barrels was less than analysts had projected, 1.2 million barrels, further underpinned the price surge.

Oil was also strengthened by speculation that the European Central Bank could be the next major central bank to enact a cut in interest rates.

"A lot of people are thinking that conditions have slowed enough that they'll cut interest rates" in Europe, said Gene McGillian, broker and analyst at Tradition Energy.

"Central banks of the world will continue to pump liquidity into the financial markets."