Oil prices and energy shares rose yesterday after a sharper-than-expected fall in crude inventories, lifting world stock markets.

Growing bets on a possible Federal Reserve rate increase as early as in June or July reduced demand for US government debt while pushing the US dollar up against the yen for a second day.

Investors’ expectations for higher borrowing costs have risen since last week’s minutes from the central bank’s April meeting signalled a June increase was on the table. Comments from policymakers and upbeat US economic data in recent days have supported those views.

“Investors have started to seriously contemplate the prospect of a hike at the start of the summer,” said Luke Bartholomew, global macro investment manager at Aberdeen in London.

Energy Information Administration data showed US crude stockpiles fell last week as imports dropped and refineries cut output. Brent oil was up 90 cents at $49.51, while US crude was up 70 cents at $49.32. Energy shares helped to boost global stock indexes, with shares of Chevron up 1.5 per cent at $101.74.

The Dow Jones industrial average was up 166 points, or 0.94 percent, to 17,872.05, the S&P 500 had gained 17.1 points, or 0.82 per cent, to 2,093.16 and the Nasdaq Composite had added 42.42 points, or 0.87 per cent, to 4,903.47. MSCI’s all-country world stock index rose one per cent, while the pan-European FTSEurofirst 300 index of leading regional stocks ended up 1.3 per cent.

A new debt deal for Greece seemed to have headed off the risk of another round of uncertainty over its finances and even its future in the euro zone after a funding crisis a year ago.

The US dollar rose against the yen for a second straight day. The euro was last up slightly against the dollar after dipping slightly to match Tuesday’s roughly 10-week low of $1.1129. The dollar was last up 0.2 per cent against the yen at 110.22 yen, off a session high of 110.45 yen.