The Australian share market is trading higher after United States markets and oil prices lifted overnight.
"The key driver this morning is energy. Oil prices strengthened again last night after a surprise on US inventories," CMC Markets chief market strategist Michael McCarthy said.
"We had seen pressure on the energy sector in the first two trading days of the week. That reversed yesterday (Wednesday), and that change in momentum has carried through into today."
World oil prices have rallied following news of tumbling crude reserves in the US, the world's top consumer.
Mr McCarthy said the decision by energy giant Woodside Petroleum to withdraw from the $US2.5 billion Israel-based Leviathan gas project appeared to have been well accepted by investors.
He said investors believed that it showed that Woodside was not prepared to invest in projects that did not stack up economically.
Mr McCarthy said there had been a minor bounce in iron ore prices which had eased some of the pressure on iron ore miners.
Other sectors of the market were travelling well.
The local bourse was also boosted by better than expected Chinese manufacturing data.
At 1200 AEST, in the energy sector, Woodside Petroleum was 72 cents higher at $41.95, and Oil Search had lifted six cents to $9.20.
Diversified miner BHP Billiton was 45 cents stronger at $37.62, Rio Tinto gained $1.52 at $60.92, and Fortescue Metals found 14 cents at $4.57.
Among the major banks, Westpac jumped 24 cents to $33.91, ANZ advanced 40 cents to $33.43, National Australia Bank rose 39 cents to $33.44, and Commonwealth Bank firmed 45 cents to $80.64.
Among other stocks, building products maker James Hardie was up 45 cents at $14.14 after it more than doubled annual profit as sales grew in its key markets of Australia, Europe and the United States.
On Wall Street on Wednesday stocks made sharp gains following mixed retail sector earnings and US Federal Reserve's policy meeting minutes confirming the Fed's stated policy course.
* At 1208 AEST on Thursday, the benchmark S&P/ASX200 index was up 54.3 points, or one per cent, at 5,478.9 points.
* The broader All Ordinaries index was up 52.8 points, or 0.98 per cent, at 5,456.7 points.
* The June share price index futures contract was 53 points higher at 5,489 points, with 14,959 contracts traded.
* National turnover was 663.1 million securities worth $1.66 billion.