Oil jumped by more than $3 a barrel on Wednesday, extending an earlier gain, after a US government report showed larger-than-expected drops in fuel stocks in the world's top consumer.

Gasoline inventories fell by 3.3 million barrels, the Energy Information Administration said, more than the 800,000-barrel decline expected. Distillates dropped 2.2 million barrels, also more than forecast.

"Today's numbers are a nice bullish surprise and come on a day when the other commodities are picking up as well," said Mike Zarembski, analyst at optionsXpress in Chicago.

"On gasoline, that's not exactly what we wanted to see heading into the driving season."    

US crude rose $3.43 to $104.65 a barrel by 1458 GMT, extending the 36-cent gain on Tuesday. It has fallen from a record high of $111.80 reached on March 17. London Brent added $2.61 to $103.21.

Crude oil inventories also bucked expectations. Stocks were expected to rise by 1.7 million barrels last week, but were unchanged.

Earlier on Wednesday, oil rose as a weakening US dollar prompted some investors to shift money back into commodities and a 24-hour strike disrupted operations at French ports.

The dollar slid after data showed that new orders for long-lasting US-made manufactured goods unexpectedly fell 1.7 percent during February, supporting oil and other commodities.

Gold, which like crude oil is used by investors as a hedge against inflation, hit a one-week high and industrial metals such as copper also gained. - Reuters