U.S. light, sweet crude rose 36 cents to $54.00, near a record peak at $54.45 hit earlier this week. Prices have bounced back rapidly from a brisk round of profit taking by big-money funds on Tuesday.

London Brent crude for December gained 25 cents to $50.30 a barrel.

World prices have surged 30 percent since late-August on fears that the U.S. is running out of time to build winter fuel supplies, which are also low in Europe and Asia.

U.S. distillate stocks, including heating oil, fell by 2.5 million barrels to 120.9 million last week, to drop more than 8 percent below last year, the U.S. Energy Information Administration said on Thursday.

Crude stocks rose 4.2 million barrels to 278.2 million to stand nearly 4 percent below last year, the EIA said.

"The drop in distillate inventories keeps the market supported," said Phil Flynn, analyst at Alaron Trading in Chicago. New York heating oil futures hit a record $1.52 a gallon after the report.

U.S. stockpiles have been slow to build for winter due in part to the lingering impact of Hurricane Ivan, which damaged oil operations in the Gulf of Mexico last month.

U.S. oil production in the Gulf is still running at about 72 percent of its normal rate of 1.7 million barrels per day after pipeline and platform damage by Hurricane Ivan, the U.S. Minerals Management Service said on Wednesday.

Japanese kerosene supplies rose 4 percent in the past week, but remain about 17 percent below year-ago levels, according to industry data released on Thursday.

German consumer stocks of heating oil rose by three percent last month to 60 percent of capacity on October 1, but remained well below levels last year ahead of peak winter demand, trading sources said on Thursday.

OPEC SEES HIGHER PRICES

OPEC President Purnomo Yusgiantoro said on Thursday record-high world oil prices would continue to rise through the end of October because of strong demand. Crude is already up 65 percent this year.

"The oil price will continue to rise through the end of October because demand is still high," he told reporters.

OPEC producers are pumping at just about full capacity to meet rapid demand growth, especially in China and the United States.

OPEC's production surge has failed to cool prices as much of its extra crude is too dense and sulphurous to produce the transportation and heating fuels consumers crave.

Demand growth in China, now the world's second biggest energy consumer, is showing signs of slowing as the government restricts investment and lending to stop its booming economy overheating.

Limited import facilities could also curb the country's soaring demand for foreign crude unless plans for new terminals, pipelines and storage tanks are speeded up, oil traders say.

Even so China's crude imports are expected to jump another 20 percent next year, or over 400,000 barrels bpd, to nearly three million bpd.

A general strike in Nigeria, which has raised fears over the country's oil supply, will likely end its first phase on Thursday "all going well," union leaders said.

The four-day strike to protest against rising domestic fuel prices, has paralyzed most businesses across the country, but oil operations in Africa's largest producer have been running normally.