Oil prices rose on Wednesday as dealers viewed Opec's deal to hike production as "symbolic" and unlikely to help with a global refinery crunch caused by soaring fuel demand. US July light sweet crude on the New York Mercantile Exchange rose 57 cents to $55.57 a barrel, within $3 of the record hit in early April and capping off a nearly 30 percent spike this year. London Brent was up 77 cents at $54.50 a barrel on the International Petroleum Exchange.
The Organisation of the Petroleum Exporting Countries agreed Wednesday to raise its formal production quotas by 500,000 barrels a day to 28 million bpd starting July 1 - a gesture it said was likely to add real barrels to the market or lower prices below $50.
"We've assessed the market and concluded that there is plentiful supply and the problem is with refining," said Saudi Oil Minister Ali al-Naimi.
Cartel President Sheikh Ahmad al-Fahd al-Sabah also was authorised to trigger consultations on a further 500,000 bpd increase within a matter of weeks, should prices stay high.
Weekly data from the US government's Energy Information Administration showed crude stockpiles in the world's biggest energy consumer falling 1.8 million barrels last week as refineries increased runs to meet surging demand for gasoline and diesel.
US demand for gasoline over the past four weeks has averaged 3.0 percent higher than last year, while demand for distillates, like diesel and jet fuel, were up 6.5 percent, the report showed.
Demand for distillate fuels has also been surging in Europe and Asia, putting added pressure on the refining industry and raising concerns over stockpiles of heating fuel ahead of next winter.
"The crude draw was expected, with refiners running hard," said Jan Stuart, an analyst at Fimat USA in New York. "But the demand figures for products are going to spook a few people."
Analysts say the market has largely ignored Opec's overtures because the production increases will do little to assuage fears that distillate supplies will be tight heading into the fourth quarter.
"Opec have been so amazingly clear that the move is symbolic, that nobody wants the crude anyway and that the real problem is with refining capacity," said Deborah White of SG Commodities in Paris.
With crude inventories at a record for the time of year in Europe and more than 9 percent above year-ago levels in the United States, oil traders are not nearly so worried about crude availability as they are about fuels.
Opec over-production has swelled global stockpiles and pushed down the price of crude on the spot market to heavy discounts to future delivery dates. US oil for December delivery costs $2.50 more than July crude.
Demand is growing for all products, but unseasonably strong consumption of diesel in the United States has focused attention on distillate stockpiles in the largest oil consumer, which have held only slightly above their level this time last year.
Traders worry that tightly stretched refineries may struggle to boost distillate inventories sufficiently ahead of the peak demand Northern Hemisphere winter.