US light crude rose five cents to $44.23 a barrel, hovering around a two-week high. London Brent was eight cents higher at $41.51 a barrel.

Prices have rallied by nearly 10 percent this week, rebounding from a five-month low of $40.25 a barrel on Monday. They had shed more than $15 in seven weeks.

Big money speculative funds which had sold the market short for the first time in over a year leapt back in to cover positions this week, inspired in part by OPEC's detailed pact to take one million barrels per day (bpd) of excess supply off the market.

US government data showing still low heating fuel inventories and the first decline in crude stocks for three months also drove gains on Wednesday, helping London's Brent crude to its biggest one-day surge since 1991.

Despite mild winter conditions until recently, heating oil inventories in the world's top consumer have remained stubbornly thin versus last year, fanning fears that weather-induced demand could strain supplies.

Temperatures are expected to fall below the seasonal norm next week in the second cold spell of the winter, bolstering demand for heating fuel, forecasters said on Thursday.

"If the cold weather persists, then people will buy," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. "We're at the top season of heating oil demand and inventory levels are below previous years."

Temperatures in the U.S. Northeast will dip as much as 6-12 F below normal by Monday, private forecaster Meteorlogix said, while others saw it as much as 20 F below normal.

Heating oil futures have rallied even faster than crude, jumping by almost 13 percent this week.

Strong consumption of diesel has further strained supplies available for heating. Distillate demand over the last four weeks has averaged nearly seven percent above the same period last year, the Energy Information Administration (EIA) said.