The euro hit an all-time high of $1.5982 on Thursday, its second record in as many days against the sagging dollar, but then lost a little ground, falling to $1.5927 late in European trading. Concerns about sagging U.S. gasoline supplies ahead of the peak demand of the Northern Hemisphere summer also helped boost prices.

The U.S. Energy Department said Wednesday that inventories of gasoline fell 5.5 million barrels last week, a much bigger decline than forecast by analysts surveyed by Dow Jones Newswires.

Crude inventories fell 2.3 million barrels last week, the department's Energy Information Administration also reported, compared to the gain analysts expected.

"The market has focused on the substantial draw in gasoline in the U.S. and also the large crude oil draw," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The report has provided a knee-jerk reaction for the market and has driven oil to a new high."

The surge in oil prices reflected concerns about how much gasoline will be available during America's driving season.

But analysts said the U.S. inventory report also showed that the country's appetite for increasingly expensive gas is declining, noting that gasoline inventories remained at healthy levels despite the drop.

"Gasoline and crude inventories dropped primarily because refiners are not really ordering crude oil and they are also holding back on operating rates because demand is weak," Shum said. "The concerns about gasoline supply in the summer may be overdone."

The EIA report also said inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline.

In other Nymex trading, gasoline futures rose 2 cents to $2.959 a gallon while heating oil futures lost 1.4 cents to $3.269 a gallon. Natural gas prices were down 2.3 cents to US$10.41 per 1,000 cubic feet.