Crude oil prices hit 2016 highs on the back of a rally in the gasoline market and after an industry group reported a surprise draw in U.S. crude stockpiles.

Brent and U.S. crude’s West Texas Intermediate (WTI) futures finished regular trading about three per cent higher, riding on the coattails of a gasoline rally that hit August highs after a series of refinery hikes.

In post-settlement trade, both benchmarks rose more than four per cent after the American Petroleum Institute reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week versus a 2.4 million-barrel build expected by analysts in a media poll.

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The API report is a precursor to official inventory data due on Wednesday from the U.S. Energy Information Administration.

“There’s a possibility we could see newer highs from here, notwithstanding the EIA data, as the market is really fired up on the idea of tightening supplies,” said John Kilduff, partner at New York energy hedge fund Again Capital.

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Brent crude rose as much as $2.01 to a 2016 high of 46.49 dollars.

U.S. crude futures gained 2.19 dollars in after-hours trade to reach a year-to-date peak of 44.83 dollars.

Crude markets got off to a rousing start in the New York session as gasoline futures and gasoline refinery margins both surged from refinery outages.

Oil prices are headed for a fourth straight week of gains, with Brent on track to finish April 17 per cent higher for its best monthly gain in a year.

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Tuesday’s oil rally was also underpinned by a weaker dollar, which fell on expectations that the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) will keep interest rates at existing levels.

The dollar rallied earlier this year, weighing on oil, as investors braced for higher rates. (Reuters/NAN)

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