Oil prices rose Wednesday after the U.S. government reported a larger-than-expected drop in crude oil supplies and stock markets climbed on Europe’s improving financial picture.

Benchmark oil for February delivery rose $1.05 to $92.16 a barrel in midday trading on the New York Mercantile Exchange.

Oil prices have hovered between $88 a barrel and just above $92 a barrel since the new year began on expectations that the U.S. economy was getting stronger. Demand for oil has remained robust in emerging markets, particularly in Asia. Some analysts expect the price to top $95 a barrel and perhaps push toward $100 a barrel in coming weeks.

“All systems appear to be “Go” for some higher lift in oil values here, at least through the balance of this month anyway and probably well into next,” energy analyst Jim Ritterbusch said.

The Energy Department said the United States’ commercial oil stockpiles fell by 2.2 million barrels to 333.1 million barrels last week. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expected a decline of only 300,000 barrels.

Gasoline supplies increased by 5.1 million barrels to 223.2 million barrels, the Energy Information Administration said. Demand rose 1.9 percent from a year ago to 9.1 million barrels a day in the past four weeks. Supplies of distillates, which include heating oil and diesel fuel, grew by 2.7 million barrels to 164.8 million barrels.

- Advertisement -

Supplies for all three categories remain at or above the average level for the past five years. Refineries ran at 86.4 percent of total capacity on average, which was 1.6 percent less than a week ago.

Meanwhile, the economic picture brightened in Europe as Portugal borrowed $1.6 billion to help its troubled economy. The successful bond auction sent stock markets up. The Dow Jones Industrial Average rose over 100 points at midday. The Standard & Poor’s 500 and the Nasdaq composite were higher as well. Oil traders often watch the stock markets to gauge consumer sentiment about the economy.

In other Nymex trading in February contracts, heating oil rose 2.20 cents to $2.6308 a gallon, gasoline futures gained 0.16 cent at $2.4800 per gallon. February natural gas futures lost 1.4 cents at $4.467 per 1,000 cubic feet.

In London, Brent crude rose $1.09 to $98.70 a barrel on the ICE Futures exchange, its highest point in over 2 years. Oil prices in Europe were boosted by the temporary closure of two offshore oil fields by Norway’s Statoil, due to gas leaks.