US gasoline stocks are now 13 million barrels or nearly 7 percent below last year's level, the US government said this week, raising concerns over low levels at a time when refiners normally rebuild inventories ahead of peak summer demand in the northern hemisphere.
US light crude for February settled 72 cents higher at $61.04 a barrel. Prices have risen 5 percent over the last three days of the year.
Big money funds, sensing a possible shortage early next year, bought gasoline futures on Friday.
"The funds are really scrambling to build a larger position in the long gasoline crack spreads," said Jim Ritterbusch, analyst at Ritterbusch and Associates in Illinois.
Gasoline futures shot nearly six cents higher on Friday to $1.71 per gallon.
"I think there is going to be a fairly precarious supply-demand balance. If we have a couple of refinery snags, there will be some product dislocations," said Ritterbusch.
London Brent crude traded 91 cents higher at $58.98 a barrel.
Prices in New York have averaged nearly $57 a barrel in 2005, almost 40 percent more than in 2004.
The sustained rally has come amid growing global fuel demand and limited spare refinery capacity, encouraging investors to buy into energy amid long-term concern over tightly stretched supplies.
Analysts forecast an average price of $57.34 for 2006.
The US government data on Thursday showed demand for distillates, including heating oil, over 5 percent higher than a year ago.
"Given heavy planned spring maintenance and persistent hurricane-related outages, (refinery) runs are unlikely to ramp up to near full rates until mid-year at the earliest," said J.P. Morgan in a report.
Prices have received a further boost as attacks in Nigeria and export disruptions in Iraq fan concern about security of supply.
Nigeria's government on Thursday said it suspected an attack was behind fires at oil product pipelines earlier in the week. Just a week earlier, gunmen blew up a crude oil pipeline.
In Iraq, all crude exports were on hold as bad weather and logistic problems stopped the flow from the country's main Basra oil terminal.
Sabotage attacks have also halted the flow of crude via pipeline to Turkey.
Sabotage also forced Iraq to shut down one of its refineries, threatening further shortages of fuel to the country's population.
Oil and natural gas output from the storm-battered Gulf of Mexico is slowly recovering from hurricane-inflicted damage earlier this year, but about 27 percent of the Gulf's 1.5 million barrels per day of crude production remained shut on Thursday, the US Minerals Management Service said.
Fears over lost supply from hurricane damage drove US oil to a record $70.85 at the end of August, before a global release of emergency oil stocks and signs of high prices taking their toll on demand pushed prices back down.
US crude stocks are now 36.1 million barrels above this time last year. The swelling stockpile is adding to expectations that producers cartel Opec will cut crude output when it meets at the end of January.
Iran viewed a 1 million barrel per day cut by Opec as a "good figure" when the cartel meets on January 31, the country's oil minister said in a newspaper interview on Wednesday.