Nov. 1 (Bloomberg) -- Crude oil rose above $96 a barrel for the first time in New York after U.S. inventories unexpectedly fell to a two-year low and the economy expanded at the fastest pace in more than a year.

Oil rebounded above $90 after the Federal Reserve cut its benchmark interest rate for a second time in two months, prompting a drop in the dollar. Petroleos Mexicanos resumed some oil exports and revealed that a storm halted more output than had been assumed.

``Strong gross domestic product growth is what fuels demand,'' said Dariusz Kowalczyk, chief investment strategist at CFC Seymour Ltd. in Hong Kong. ``The demand side is looking tighter since it seems growth isn't slowing that much.''

Crude oil for December delivery gained as much as $1.71, or 1.8 percent, to $96.24 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983. It traded at $95.38 at 3:21 p.m. Singapore time.

Yesterday, the contract surged $4.15, or 4.6 percent, to settle at $94.53 barrel, the biggest jump in value since Sept. 19, 2005, when Hurricane Rita threatened Gulf of Mexico production. Oil is up 63 percent from a year ago.

Crude prices plunged 3.4 percent on Oct. 30 after Goldman Sachs Group Inc., which said in July oil may reach $95 a barrel, told clients it was ``time to take profits.''

``As long as we get very strong gross domestic product numbers like we did today, you'll see increased demand,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California.

China today raised fuel prices by as much as 10 percent to coax refiners into producing oil products to relieve shortages in the world's second-largest energy consumer.

Economic Growth

Brent crude oil for December settlement rose as much as $1, or 1.1 percent, to a record $91.63 a barrel on the London-based ICE Futures Europe exchange at. It traded at $91.18 at 3:21 p.m. Singapore time.

U.S. gross domestic product grew at an annual rate of 3.9 percent in the third quarter, the most since the first three months of 2006.

The economic data is ``definitely supportive for prices,'' though the strength in exports isn't surprising given the weakness in the dollar, said Rowan Menzies, an analyst at Commodity Warrants Australia Pty in Sydney.

The dollar sank to an all-time low of $1.4504 against the euro yesterday after the Federal Reserve's interest-rate cut.

The economic factors added to the ``nasty surprise'' of the stockpile numbers, Menzies said. Momentum seems to be building for an increase to $100, yet oil may be down to about $85 within a month in the absence of more supportive news, he said.

Stockpiles, Mexico

U.S. crude stockpiles dropped 3.89 million barrels to 312.7 million barrels last week, the lowest since October 2005, according to the Department of Energy. A 400,000-barrel gain was expected in a Bloomberg News survey.

Inventories at Cushing, Oklahoma, the delivery point for New York futures, fell 17 percent, the report showed. Stockpiles dropped to 15.1 million barrels in the biggest decline since November 2004.

``The concern is that market conditions might tighten further over the coming months,'' said David Moore, a commodity strategist with Commonwealth Australia Bank Ltd. in Sydney. ``That's driven the oil price higher.''

Oil for March delivery was at $91.88 a barrel at 3:43 p.m. Singapore time, while oil for December 2008 delivery was at $86.06 a barrel.

Pemex resumed crude-oil exports at a rate of 800,000 barrels a day and will add another 300,000 by the end of today local time, Carlos Morales, chief of the company's exploration and production, said yesterday at a Mexico city press conference. Pemex previously said that 600,000 barrels a day of production had been halted.

``The shock of the data is understandable when you consider the news from Pemex that they shut in something like 1 million barrels a day, not 600,000,'' said Chris Mennis, owner of oil broker New Wave Energy LLC in Aptos, California. ``Most of that could have been going to the U.S.''

To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Angela Macdonald-Smith in Wellington at amacdonaldsm@bloomberg.net.

Last Updated: November 1, 2007 03:52 EDT