Oil Back in Record Territory

"We may see a similar reduction in inventories next week because Mexico is still not back up to full speed after being hit by severe weather this week," he says.

Compounding the problem was the finding that inventories at the Cushing, Okla., hub fell by 3 million barrels during the week to reach the lowest level since October 2005.

"The point of delivery for Nymex crude is Cushing, so the large withdrawal from stores there sent the price of West Texas intermediate crude through the roof," says Williams. "That wouldn't have happened if the drop in stores had happened in Houston or Corpus Christi, Texas."

Also affecting crude prices during the session was anticipation among traders that the Federal Reserve would lower interest rates following its two-day meeting, and they were proven correct.

Lower interest rates tend to depress the value of the dollar, and when the U.S. currency falls, dollar-denominated assets, like crude, often rise.

Meanwhile, energy stocks were also strong. ConocoPhillips (COP Quote) jumped 2.7% to $84.96, and Chevron (CVX Quote) advanced 1.6% to $91.51. Exxon Mobil(XOM Quote) rose 0.9% to $91.99.

Solar power products maker SunPower (SPWR Quote) was upgraded by RBC Capital Markets to outperform from sector perform, sending its shares 6.2% higher to $126.46.