At 12:20 pm (0420 GMT), New York's main contract, light sweet crude for delivery in November, was up four cents to 66.39 dollars a barrel from its close of 66.35 dollars on Wednesday in the United States, where it had shot up 1.28 dollars.

The market ignored reports of better than expected US inventory data, remaining concerned about the fate of refineries continuning offline following Hurricane Rita's passage at the weekend, less than a month after Katrina.

"Refinery recovery looks likely to be slow," said Victor Shum, an analyst with US energy consultancy Purvin and Gertz in Singapore.

"Even though the (US) intentory report ... showed rather large gains in gasoline stocks, that was ignored by the market."

He said that with the northern hemisphere winter season fast approaching, demand for heating fuel was likely to build and the refineries need to get back into operation.

"Going forward, the tight supply situation across the entire energy complex, including crude oil production and refinery capacity will really put a high (ceiling) on prices," Shum said.

The US Department of Energy (DoE) reported a drop in crude oil inventories of 2.4 million barrels, a sharper decline than the 1.5-million-barrel drawdown expected by financial markets.

But gasoline (petrol) reserves increased 4.4 million barrels, against market expectations of a drop of two million barrels.

Distillates, used for heating and diesel fuel, fell 500,000 barrels, not as bad as expectations of a decrease of two million barrels.

US refineries operated at 86.7 percent of capacity in the week to September 23, down from 90.8 percent the previous week, the DoE added.