Oil jumps to $106 as fuel supplies fall

Alex Lawler
Reuters
Wednesday, March 26, 2008

Oil jumped $4 a barrel on Wednesday, extending an earlier gain, after a U.S. government report showed larger-than-expected drops in fuel stocks in the world's top consumer.

Gasoline inventories fell by 3.3 million barrels, the Energy Information Administration said, more than the 800,000-barrel decline expected. Distillates dropped 2.2 million barrels, also more than forecast.

"Today's numbers are a nice bullish surprise and come on a day when the other commodities are picking up as well," said Mike Zarembski, analyst at optionsXpress in Chicago.

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"On gasoline, that's not exactly what we wanted to see heading into the driving season."

U.S. crude rose $4.02 to $105.24 a barrel by 1524 GMT (11:24 a.m. EDT), extending the 36-cent gain on Tuesday. It has fallen from a record high of $111.80 reached on March 17. London Brent added $2.87 to $103.47.

Crude oil inventories also bucked expectations. Stocks were expected to rise by 1.7 million barrels last week, but were unchanged.

Earlier on Wednesday, oil rose as a weakening U.S. dollar prompted some investors to shift money back into commodities and a 24-hour strike disrupted operations at French ports.

Full article here.

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