The fall in stock was the contributing factor behind US light crude in New York moving up 63 cents to US$32.36 a barrel, hitting a peak of US$32.50, nearly 35% above last year.

In London, the benchmark Brent crude was 31 cents higher at US$28.39 a barrel.

The Energy Information Administration said US crude oil stocks fell 4.6 million barrels to 284.4 million barrels last week, dropping more than 12 per cent below last year.

The low inventories and delays in the resumption of Iraq's postwar oil exports enabled an OPEC meeting in Qatar to put off making fresh supply cuts. However, the group decided to meet again in just seven weeks on July 31 in case recovering Iraqi exports undermine high prices. Currently OPEC members are producing 25.4 million barrels a day.

Iraq will this month ship its first crude since mid-March but looting and sabotage at oil facilities means that exports will be well below prewar levels. The 3-month halt to Iraq's crude exports has prevented US crude inventories from rebuilding after disruptions in Venezuela and Nigeria ran down supplies earlier this year.

After falling from 12-year highs near US$40 after Middle East oil facilities escaped the US-led invasion of Iraq without much damage, prices have rebounded to levels that may further undermine already weak economic growth.

It is estimated that it will take several more months before Iraq can produce at levels up to two million barrels per day and it is also believed that the struggling state will ignore OPEC quotas and set its own production levels.

The uncertainty around Iraq's production has lead to an agreement between the OPEC members to meet regularly, sending a message to world producers that the cartel is remaining vigilant and is willing to take action.