Crude Surges to Record Closing Price Near $111
Oil jumped to a record close on the New York Mercantile Exchange Wednesday after a government report showed a sharp drop in U.S. inventories ahead of the summer driving season.
Nymex crude for May delivery gained $2.37 a barrel, or 2.2 percent, to settle at $110.87. Earlier in the session it rose $3.71 to $112.21 a barrel, breaking the previous intraday record of $111.80 hit March 17.
London Brent was trading higher than $108 a barrel after the Nymex's 2:30 pm New York time close.
U.S. crude stockpiles fell 3.2 million barrels last week as imports declined, countering analyst expectations for a build, while gasoline and distillate inventories also tumbled, the U.S. Energy Information Administration reported.
"It's bullish across the board. A very low crude import number got us a surprise draw there," said Tim Evans, analyst at Citigroup Futures Research.
"Imports are basically running behind year-ago levels." Concern about diesel supplies amid strong demand in Europe and Asia also supported crude this week, with London gas oil hitting an all-time high of $1,026.75 a tonne on Wednesday.
Further strength came from weakness in the dollar, which fell against the euro and the yen on views the U.S.
Federal Reserve could cut interest rates by a 50 basis points this month amid worries of a possibly severe U.S. economic downturn.
The weak dollar has helped boost prices for commodities denominated in the greenback by boosting non-U.S. spending power and by luring investors seeking an inflation hedge.
High oil prices and the weakening U.S. economy have stirred demand worries in the world's largest energy consumer. The government on Tuesday forecast U.S. summer driving use would fall for the first time since 1991.
Despite calls from consuming nations for OPEC to raise oil production to help tamp record prices, cartel members insist markets remain well supplied.