Oil prices jump after U.S. report says fuel inventories were lower than expected last week

The Associated Press ,  New York   |  Wed, 03/26/2008 11:40 PM  |  Headlines

Crude oil futures soared Wednesday after the Energy Department said the United States' inventory of crude oil, gasoline and distillate fuels was lower than expected last wee.

Gasoline and distillate stocks, which include heating oil and diesel fuel, dropped much more than forecast, while crude oil inventories were unchanged, according to the Energy Information Administration's weekly inventory report. Analysts surveyed by Dow Jones Newswires had expected crude supplies to ris by 1.7 million barrels.

Investors were already buying oil before the release of the report; the falling dollar, which was hurt Wednesday by disappointing economic data, again raised oil's appeal as a hedge
against inflation.

Light, sweet crude for May delivery rose $4.08 to $105.30 a barrel on the Nw York Mercantile Exchange.

The inventory report stoked worries that supplies of gasoline in particular are falling at a time when analysts would like to see them rising in advance of peak summer driving season. Gasoline inventories slid by 3.3 million barrels last week, more than four times the dcline analysts had expected.

In part, that's because refinery activity dropped by 1.6 percentage points when analysts had expected an increase.

Distillate supplies fell by 2.2 million barrels, about 600,000 more than expected.

Investors shrugged off data showing that demand for gasoline fell 1.3 prcent last week. Demand is off in part because retail gas prices are in record territory. At the pump, gasoline prices rose 0.6 cent overnight to a national average of $3.261 a gallon (3.8 liters), according to AAA and the Oil Price Information Service.

Prices have slid recently from a record of $3.285 a gallon set last week, largely because of oil's 10 percent decline last week.

But with oil now on the rebound, gas prices could rise further. That would be bad news for consumers also bearing the burden of falling home values and high food prices. Diesel fuel, which is used to transport the vast majority of the nation's food and goods, rose
0.1 cent overnight to a national average of $4.027 a gallon, a cent shy of a record set Saturday. (***)

 

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