Oil Prices Settle Above $143 for First Time Ever

Oil prices hit another record settling price Wednesday, and then followed up on their close by reaching a record high over $144 a barrel in post-settlement trade, as a drop in U.S. crude inventories stoked supply concerns.

U.S. light, sweet crude hit a record $144.15 a barrel in post-settlement trade after settling up $2.60 at $143.57 a barrel—a record close, and the first time oil has ever settled above $143 on the New York Mercantile Exchange.

London Brentcrude settled up $3.59 at $144.26 a barrel after hitting an all-time high of $144.76.

U.S. crude oil stocks fell by 2 million barrels to 299.8 million barrels last week, putting commercial inventories below 300 million barrels for the first time since January, the U.S. Energy Information Administration reported.

"The 2-million-barrel draw in crude stocks was supportive, as imports remain relatively low for this time of year,'' said Tim Evans, an energy analyst at Citi Futures Perspective.

Gasoline stocks rose, however, as high pump prices continued to cut summer gasoline demand.

A smaller-than-expected rise in distillate stocks, a category that includes heating oil and diesel, pushed U.S. heating oil futures to a record high.

Oil prices have jumped seven-fold since 2002 as demand from emerging economies like China and India stretch supply growth.

Fears of an escalation in the showdown between Iran and the West over Tehran's nuclear program have helped push oil prices to fresh peaks amid speculation that Israel is preparing a preemptive strike against Iran.

The United States has said it would defend shipping in the Gulf in the event Iran made good on threats to block the Strait of Hormuz — through which 40 percent of the world's seaborne oil passes — if the OPEC nation were attacked.

However, Iranian Foreign Minister Manouchehr Mottaki struck a conciliatory tone on Wednesday, saying Tehran would reply shortly to an offer from Western powers designed to curb its nuclear work.

Western nations say Iran's nuclear program is aimed at developing atomic weapons, while Tehran insists it has only peaceful purposes.

The weak dollar also continued to support oil prices, as the greenback fell against the euro on signs of weakness in labor markets and as traders anticipated the European Central Bank would raise interest rates on Thursday.

Investors have been using oil and other commodities as a hedge against the weaker dollar and inflation, helping to fuel a rise in oil prices of more than 40 percent since January.