Oil prices extended gains Wednesday on a weaker dollar and another drop in US crude inventories, easing concerns about a global supply glut, traders said.

US benchmark West Texas Intermediate for delivery in June added 45 cents to $61.28 a barrel.

Brent North Sea crude for June rallied $1.02 to stand at $67.88 a barrel in late London deals.

Prices had surged on Tuesday owing to a weaker dollar that makes commodities such as oil that are denominated in the US unit cheaper for holders of rival currencies.

That helped to extend gains Wednesday, while prices were also supported by news from the US Department of Energy that crude stockpiles declined by 2.2 million barrels last week in the world's biggest oil consumer, far higher than market expectations.

But a glut in the global oil market has not evaporated, with other countries stepping up output while US shale producers have cut back owing to the sharp drop in prices since last year, the International Energy Agency said on Wednesday.

In its latest monthly report the IEA said that global oil supply remained flat at 95.7 million barrels per day (mbd) in April.

It said slowing US shale oil output was being offset by higher production from countries in the OPEC oil cartel as well as several non-OPEC nations.