The West Texas Intermediate for July delivery added 2.27 U.S. dollars, or 2 percent, to settle at 117.58 dollars a barrel on the New York Mercantile Exchange. Brent crude for August delivery increased 1.3 dollars, or 1.1 percent, to close at 119.81 dollars a barrel on the London ICE Futures Exchange.
Prices were driven by a tight market and worries about further supply squeezing.
"Global oil supply may struggle to keep pace with demand next year, as tighter sanctions force Russia to shut in more wells and a number of producers bump up against capacity constraints," the International Energy Agency warned in its closely-watched monthly report released on Wednesday.
In its monthly report published on Tuesday, the Organization of the Petroleum Exporting Countries saw the oil market as significantly undersupplied in the second half of this year.
Prices also garnered some support from weakness in the U.S. dollar. The dollar index, which measures the greenback against six major peers, dropped 1.45 percent to 103.6330 in late trading on Thursday, following a 0.37 percent-decrease in the prior session. Historically, the price of oil is inversely related to the price of the U.S. dollar.
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