Oil reached a 25-month high for a fifth consecutive session on Thursday as a surplus in top consumer the United States subsided and strong industrial output in China sent demand to a record.

US crude for December rose 40 cents to $88.21 a barrel at 0415 GMT, after touching $88.35 earlier, its highest since October 2008. ICE Brent added 34 cents to $89.30.

Crude inventories in the US unexpectedly fell last week, while declines in fuel stockpiles exceeded forecasts, as the nation's oil demand increased by 2.9 percent on a rolling four-week basis.   

China's industrial production grew 13.1 percent in October from a year earlier, boosting oil consumption by 12 percent from a year earlier to a record 8.92 million barrels per day (bpd).   

'The oil market is currently dominated by positive news,' said Stefan Graber, a commodities analyst with Credit Suisse in Singapore. 'We think prices are on their way for a test of the $90 mark, at least in the Brent market.'    

An Energy Information Administration government report on Wednesday showed a 3.3 million-barrel drawdown in US crude inventories last week, compared with forecasts for a 1.4 million-barrel gain.   

Stockpiles of distillate, including heating oil and diesel, fell 5 million barrels as demand for the fuels over the past four weeks jumped 16 percent from the same period a year earlier.   

Gasoline and heating oil led gains in the oil price complex on Wednesday after a bigger-than-expected decline in inventories as demand rose, partly stoked by distillate exports to Europe, even though refiners stepped up production.   

US economic growth showed more tentative signs of improving on Wednesday as jobless benefit claims hit a four-month low last week and the international trade gap narrowed in September.   

Japan's Nikkei stock index rose to its highest since June on Thursday, adding to returns that have outstripped US and European markets so far in November, while the blast of Chinese economic data also supported prices of other commodities. The dollar weakened by more than 0.1 percent against a basket of currencies.

Chinese consumer price inflation in October quickened to its fastest pace in two years, which is likely to sharpen complaints from Beijing and others that the Federal Reserve's $600 billion money printing scheme will hasten capital flows to their economies, complicating efforts to keep price pressures at bay. - Reuters