Oil prices have set a fresh record high of $100.09 a barrel in New York.
Oil prices have doubled from $50 a barrel in January 2007
Light sweet crude rose after Energy Information Administration (EIA) figures showed the lowest weekly US stockpile levels since January 2005.
Indonesia's Opec representative earlier warned that oil prices could climb as high as $110 a barrel and said the producers' cartel might raise supply.
Trading is expected to continue to be volatile, as investors wrestle with economic and geopolitical concerns.
Oil dipped to $99.02 in earlier trading.
Indonesia's Opec representative Maizar Rahman said that there might be an increase in supply at the Opec meeting in Vienna on 1 February.
But other members have said that there no shortage of oil in the market and blamed rising prices on other factors.
The EIA weekly figures showed that inventories of crude oil fell by four million barrels, which was more than double the expected figure.
The oil price initially fell because stockpiles of distillates, which include heating oil and diesel fuel, unexpectedly rose by 600,000 barrels,
But prices rose as traders digested the fact that crude stockpiles were at their lowest levels since January 2005.
The weak US dollar has also increased demand for oil, which is priced in dollars, because it makes it relatively cheaper for holders of stronger currencies.
"More violence in Nigeria, concerns about stability in Pakistan, oil inventory expectations and good old-fashioned cold winter weather", were all responsible, according to Phil Flynn at Alaron Trading.
There are concerns that the high price of oil will stoke price pressures at a time when many central banks are trying to cut interest rates to stimulate growth.
"It's going to have a huge impact on overall global inflation," said Steve Rowles, a commodities strategist with CFC Seymour securities in Hong Kong.