OIL prices surged 2.6-per cent yesterday after a report from the US government showed an unexpected fall in crude inventories in the world's largest energy consumer, pulling supplies down from six-year peaks. US light sweet crude ended up dollars-1.31 to dollars-50.98 a barrel, breaking the dollars-50 mark for the first time since May 12. Brent crude settled dollars-1.25 higher at dollars-50.07 a barrel. The strength in prices brings crude oil more than 10-per cent above its low of dollars-46.20 hit last week -a trough that had been encouraged by swelling US crude stockpiles and the highest Opec output in 25 years. Yesterday's gains came after the US Energy Information Administration reported US crude stocks fell last week by 1.6 million barrels, countering expectations of another build.

Higher refinery demand and limited imports going into summer will likely spell additional declines in stockpiles, which had risen sharply over the past 15 weeks to their highest level since 1999, the EIA said.