---

World oil prices rose by more than a dollar in Asian trading Thursday after sharp falls overnight in response to a larger-than-expected rise in U.S. crude oil reserves and a weaker dollar after the U.S. central bank cut its key interest rate.

The U.S. Federal Reserve said Wednesday it would cut the federal funds rate by a quarter percentage point to 2 percent. In early currency trading in Asia, the dollar lost ground against both the euro and yen.

Light sweet crude for June delivery on the New York Mercantile Exchange (NYMEX) surged $1.35 to $114.81 per barrel in morning trade from $113.46 at the close of trading on Wednesday. The contract had earlier traded at an intraday high of $115.23 before settling at lower levels, trading at $114.6 by 07:13 GMT.

London's Brent North Sea crude for June delivery rose $1.36 to $112.72, trading at $112.52 by 07:15 GMT.

The Energy Information Administration (EIA) reported on Wednesday that crude inventories for the week ended April 25 had showed a surprise increase of 9 million barrels, higher than analysts had predicted. Distillate fuel oil also rose 1.1 million barrels to 105,831, well above the 250,000 barrels draw anticipated by market experts.

	25-Apr	+/-	18-Apr
Crude	1,669,119	9,039	1,660,080
Gasoline	211,089	-1,483	212,572
Kerosene	38,738	455	38,283
Distillate Fuel Oil	105,831	1,129	104,702
Residual Fuel Oil	39,522	377	39,145

The increase in U.S crude stockpiles alleviated some of the pressure on oil supplies that had intensified in recent days. A strike at BP's Grangemouth refinery lead to supplies from the North Sea Forties pipeline being cut, forcing the closure of the whole Forties system which carries up to half the UK's oil production. Recent rebel attacks on oil installations in Nigeria have reduced oil exports out of the country recently, also affecting global oil supples.