NEW YORK -- Oil prices climbed Wednesday on rising hopes of economic recovery that lifted stock markets and a large drop in US gasoline reserves that could signal revived demand.

New York's main contract, light sweet crude for June, leapt $1.05 to close at $50.97 a barrel.

After falling by $1.63 over the past two sessions, the New York futures contract shot up "really because of the stock market," said Andy Lipow at Lipow Oil Associates.

The European stock markets finished with strong gains, and Wall Street was headed in the same direction an hour before the closing bell.

"People see the stock market as an indication of the economic situation and of the future oil demand," Lipow said.

In London, Brent North Sea crude oil for delivery in June gained 79 cents to settle at $50.78 a barrel.

Lipow said in addition to the equities factor, the market reacted positively to a surprisingly weak drop in US gasoline reserves in the latest weekly government energy report.

The US Department of Energy (DoE) on Wednesday reported that crude oil stockpiles increased by 4.1 million barrels during the week ending April 24, amid weak energy demand as the economy struggles with recession.

US crude inventories increased for the seventh consecutive week, to 374.7 million barrels, 18 percent higher than a year ago and the highest level since September 1990.

The stockpiles are above the median, or halfway, level for this time of year, the DoE said.

"Against the backdrop of demand estimates that are continually being revised downward, it is hard to explain the market's resilience," said Mike Fitzpatrick at MF Global.

Traders focused on a drop in US gasoline stockpiles, of 4.7 million barrels.

Most analysts had expected a 200,000-barrel decline.