Oil prices rose Wednesday amid news of a decline in US petroleum inventories, suggesting a rise in demand in the world's biggest economy.
New York's main contract, West Texas Intermediate (WTI) for January delivery, rose $1.58 to settle at $89.98 a barrel.
Brent North Sea crude for February delivery climbed $1.52 to close at $110.36 a barrel in London trade.
"The market overall was supported by a decline in crude oil inventory this week, as well as an increase in refineries runs," said Andy Lipow of Lipow Oil Associates.
The US Department of Energy said Wednesday that stockpiles of heating fuel and crude oil both dropped last week. Inventories of US distillates, comprising diesel and heating fuel, slid 1.1 million barrels in the week to December 14, the DoE said. Crude stocks fell by 1.0 million barrels.
The United States is the world's biggest consumer of crude.
Lipow added that the market has also been lifted by an improvement in housing permits.
Data released earlier Wednesday showed new building permits for privately owned housing units, which signal potential future homebuilding, had increased 3.6 percent compared to October, coming in at a seasonally adjusted rate of 899,000.
Market confidence has also been boosted by hopes of a breakthrough in Washington on averting the "fiscal cliff" of tax hikes and spending cuts due to take effect at the start of January.
The US economy will likely tip into recession in the absence of a deal.