New York  - US stocks closed higher Wednesday after a morning slump, as crude prices surged following a government report indicating a surprising drop in oil supplies.

The Energy Department's weekly inventory report showed that US light crude for September delivery rose 4.7 per cent to settle at 72.42 dollars a barrel. Prices are up 62 per cent this year.

The report said that US inventories declined the most in over a year. The crude price rally boosted oil stocks, including Chevron and Exxon Mobil.

"The economy is doing a little better than people thought," Edward Hemmelgarn, president of Shaker Investments Inc in Cleveland, told Bloomberg news. "We might be using a little more oil. People are taking that as a positive indicator of the economy expanding."

The blue-chip Dow Jones Industrial Average jumped 61.22 points, or 0.66 per cent, to close at 9,279.16. The broader Standard and Poor's 500 Index climbed 6.79 points, or 0.69 per cent, to 996.46. The technology-heavy Nasdaq Composite Index was up 13.32 points, or 0.68 per cent, to 1,969.24.

On currency markets, the dollar fell against the euro to 70.25 euro cents from 70.78 euro cents on Tuesday and dropped against the Japanese currency to 94.07 yen from 94.72 yen. (dpa)