Oil jumped by as much as $1.01 on Wednesday midafternoon, briefly topping $75 per barrel. The upward movement followed a steep drop in U.S. gasoline stocks -- which fanned concerns that the world's top consumer could face a shortfall during the peak summer driving season.
Plagued by a string of unplanned outages, U.S. refiners have drawn down inventories to keep up with growing gasoline demand, helping push U.S. light, sweet crude near record peaks.
Global benchmark London Brent crude rose $1.00 to $76.53 a barrel by 1:28 p.m. EDT, after falling 76 cents the previous day. It hit a $78.40 peak Monday, near a record high. U.S. light, sweet crude rose 86 cents to $74.88 a barrel.
The U.S. Energy Information Administration surprised the market Wednesday morning with data showing gasoline stocks dropped 2.3 million barrels last week. Analysts had forecast a 900,000 barrel rise.
Crude stocks, which have been near nine-year highs, fell 500,000 barrels as U.S. refinery utilization rates inched up 0.8 percentage points, to 91 percent of capacity.
"There is a triple whammy on gasoline," said Phil Flynn, analyst at Alaron Trading. "Production dropped and imports fell sharply while demand grew stronger. These are mostly opposite of what the market was looking for and so we see prices across the petroleum complex on the rise."
Speculative inflows have contributed to the rise in crude prices, which saw Brent crude on Monday come within 25 cents of its record of $78.65 a barrel set on Aug. 8 last year. Concerns that strong demand will whittle down high inventories in the United States and other consumer nations has lifted prompt-month Brent prices above later months. This typically signals a tighter supply outlook.
"Tightness in crude supply is expected to spread to the U.S. over time, as U.S. refineries emerge from extended maintenance shutdowns," said Fimat USA analyst Antoine Halff.
The price surge over the past month has prompted calls from the International Energy Agency for OPEC to relax its current supply restraints.
The Organization of the Petroleum Exporting Countries, which meets next in September, has resisted calls to pump more oil, saying there is enough crude and that high prices reflect tightness in oil products, such as gasoline.