At 10:45 am (0245 GMT), New York's main futures contract, light sweet crude for delivery in December, advanced 85 cents to 87.95 dollars a barrel from its close of 87.10 dollars a barrel in late US trades.

The benchmark contract advanced 1.83 dollars a barrel overnight after the US Energy Department (DoE) said inventories fell higher than expected last week.

Brent North Sea crude for December climbed 73 cents to 85.10 dollars.

Dariusz Kowalzcyk, an analyst with CFC Seymour Securities in Hong Kong, said the sharp declines in the US energy inventory highlighted supply concerns amid strong demand.

"The decline in crude oil and products were quite deep and unexpected because the market was hoping for a rise. This highlights the tightness of the physical supply," he said.

The bombing by Turkish warplanes of Kurdish separatist rebel positions in Northern Iraq contributed to market jitters, he said.

Several of Iraq's major oilfields are located in the North and any conflict with Turkey could disrupt supply, analysts said.

The DoE said that stockpiles of US distillates, which include diesel and heating fuel, sank by 1.8 million barrels, confounding market expectations of a rise of 275,000 barrels.

Heating fuel stocks are a key market focus because demand usually surges during the northern hemisphere winter.

Compared with a year ago, US distillates stocks are 7.6 percent lower and crude reserves are 5.9 percent lower.

The fall in crude stocks came amid a huge 1.3 million barrel per day decline in imports, which some analysts said would not be repeated in the next few reports, especially with rising OPEC production.

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