Oil inventories post surprise drop

U.S. light crude for December delivery jumped $1.58 to $86.80 a barrel on the New York Mercantile Exchange. Oil had traded down 22 cents to $85.05 just prior to the report's release.

In its weekly inventory report, the Energy Information Administration said crude stocks plunged by 5.3 million barrels last week. Analysts were looking for an increase of 300,000 barrels, according to a Dow Jones poll.

Gasoline supplies fell by 2 million barrels while distillates, used to make heating oil and diesel fuel, slipped by 1.8 million barrels. Analysts were expected gasoline stockpiles to grow by 1.1 million and distillates to rise by 200,000.