SINGAPORE (Thomson Financial) - World oil prices rose by over one dollar in Asian trading on Thursday after previous sharp falls overnight in response to a bigger-than-expected rise in U.S. crude reserves.

In morning trade, New York's main contract, light sweet crude for June delivery surged $1.57 to $115.03 per barrel from $113.46 at the close of floor trading during U.S. hours on Wednesday.

At current levels, New York oil prices are down nearly five dollars from the record trading high of $119.93 struck on Monday.

The latest price surge may be short-lived if the dollar continues to recover against the major currencies and worries over energy demand flare up again, dealers said.

"I imagine anyone who is bullish is looking at this opportunity to buy but I expect it to be short-lived," said Rowan Menzies, head of research at investment firm Commodity Warrants Australia.

"I think the dollar will firm and people will start getting more and more concerned about demand," he said.

The U.S. Federal Reserve on Wednesday cut the fed funds rate by a further quarter point, as expected, to 2.0 percent. The U.S. central bank also decided to lower the discount rate it charges banks by 25 basis points to 2.25 percent.

The dollar was generally stable after the widely expected rate cut.

The U.S. currency fell to a record low of $1.6019 to the euro on April 22 but has since recovered, changing hands at around $1.5634 in Asian trading on Thursday.

U.S. government data released on Wednesday showed that American crude inventories surged by 3.8 million barrels in the week ending April 25, far stronger than market expectations of 1.5 million barrels.

U.S. gasoline stockpiles, closely watched at the beginning of the holiday driving season, fell by 1.5 million barrels, broadly in line with expectations.

By contrast, distillates -- diesel and heating oil -- unexpectedly climbed by 1.1 million barrels. The market expected a drop of 500,000 barrels.

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