At 2:20 pm (0620 GMT), New York's main oil futures contract, light sweet crude for delivery in July, was up 12 cents to 65.89 dollars a barrel from 65.77 dollars in late US trades.

Brent North Sea crude for July was up 19 cents to 70.79 dollars. In London on Wednesday, Brent hit 70.84 dollars, the highest level since late August.

The US Department of Energy (DoE) said in its weekly report that gasoline stocks rose 1.5 million barrels in the week to May 18 but remained "well below the lower end of the average range."

The market has been preoccupied with gasoline prices ahead of the peak demand season from the end of this month when Americans take to the roads on holiday.

"The report was very weak for crude oil and very bullish for gasoline. Even though gasoline inventories have increased, demand is very strong and the situation is not really improving much," Mitsui Bussan Futures chief commodities strategist, Tetsu Emori, said from Tokyo.

Global Insight analyst Simon Wardell said gasoline stocks should be rising more sharply in May and June but refinery outages in the United States have hit inventories.

US gasoline inventories have risen for the past three weeks after steady falls for three months amid refinery problems that still continue.

Emori said the current run-rate at US refineries is not enough to meet demand.

"The US should increase their import of gasoline as much as possible from places like Russia," he said.

Meanwhile, Algerian Energy Minister Chakib Khelil ruled out an Opec output hike to help bring oil prices down, saying that the recent spike was not the result of supply problems.

He was quoted by the APS news agency on Wednesday as saying: "The current spike in oil prices is not a result of insufficient (crude oil) supply."

"Opec cannot intervene in problems like cuts in Nigerian production and decide to increase the output of its (other) member countries." said Khelil who is also vice president of the Organisation of the Petroleum Exporting Countries.

Nigeria, Africa's biggest oil producer, has lost about a quarter of its output in the restive oil-producing south.

At the same time concerns have grown over Iran which persists in defying UN demands to stop enriching uranium.