Oil prices rose more than a dollar to 2015 highs on Wednesday, as a month-long rally gained further impetus from a fall in US crude stocks and conflict in the Middle East.

Brent crude jumped by $1.36 to $68.88 a barrel by 0855 GMT, after hitting a 2015 peak of $69.14.

US crude traded $1.51 higher at $61.91 a barrel, near an intraday high of $62.05.

"We haven't seen hedge funds and money managers to be as optimistic and bullish as they are currently," said Vyanne Lai, an oil analyst with National Australia Bank.

"They are at their most bullish since July last year, when the oil market fundamentals haven't really changed that much."

Industry group the American Petroleum Institution (API) said on Tuesday that US crude oil stocks fell for the first time this year, giving a lift to oil prices.

The API said that overall stocks fell by 1.5 million barrels while stocks at the key delivery point of Cushing, Oklahoma fell by 336,000 barrels.

The US government's Energy Information Administration will issue official stockpiles data later on Wednesday.

Conflict in Yemen continued on Wednesday after witnesses said planes from a Saudi Arabia-led coalition struck Yemeni towns overnight, following mortar attacks from Iran-allied Shi'ite Houthi rebels.

While Yemen is only a small oil producer, it sits on key shipping routes and any conflict involving its neighbour Saudi Arabia, the world's leading oil exporter, shakes the market.

In Libya, protests have stopped crude flows to the eastern port of Zueitina. Libyan output is currently below 500,000 barrels per day, a third of what the country pumped before 2010.

Oil prices also drew support as the dollar fell 0.3 per cent against a basket of currencies, on course for a fourth straight weekly loss.

A weaker dollar makes greenback-traded commodities like crude oil more attractive for holders of other currencies.

Iran's Supreme Leader Ayatollah Ali Khamenei said on Wednesday that Tehran would not take part in nuclear talks if threatened with military force, state television said, as Iran and world powers try to meet a June 30 deadline for a final deal.

Any breakdown in talks with the West and Iran would prolong any possible return of Iranian crude exports at full throttle, denying the market additional oil.

Oil's May rise followed a rally of 20 per cent for Brent and 25 per cent for US crude prices in April, despite indications from some Opec delegates that the Organization of the Petroleum Exporting Countries (Opec) may keep production unchanged at current high levels at a meeting next month. – Reuters