December New York Mercantile Exchange (NYMEX) crude futures traded at $25.35 per barrel at 0805 GMT, up 22 cents from New York's close on Monday and near a 34-month high.

In New York, the contract soared to the 34-month high of $25.45, but eased to end the day at $25.13.

The main factor driving prices was sliding global oil inventories, eroded by lower production from Opec as the peak winter demand season picks up.London's Centre for Global Energy Studies (CGES) said in a monthly report on Monday that oil cover by commercial companies could hit minimum operating levels by early next year.

In August, CGES had warned of a price explosion during the northern hemisphere winter if Opec did not supply more crude to the world's markets.In its latest report, the company said that after a heavy draw in September, commercial inventories held in the industrialised nations of the Organisation for Economic Cooperation and Development (OECD) fell in October, including 8,00,000 brrels per day in the United States and Europe.

"What is more, there are hardly any spare stocks at sea, in temporary storage or in the non-OECD countries, the companies having run them down first before tapping their own inner reserves," the CGES said.

Oil prices have been buoyed by bullish comments from various producers, including some key Opec members, saying output cuts will continue into the second quarter next year and possibly longer.