Oil surges to record at over $95 a barrel

By Matthew Robinson

NEW YORK (Reuters) - U.S. oil hit a record over $95 a barrel on Wednesday, posting the biggest gain in 10 months after a steep drop in U.S. inventories fueled winter supply concerns and the U.S. Federal Reserve cut interest rates.

U.S. oil rose $4.90, more than 5 percent, to $95.28 a barrel in late electronic trading after settling at $94.53 earlier. London Brent settled up $3.19 at $90.63 a barrel.

U.S. crude oil stocks fell 3.9 million barrels in the week to October 26, government data showed, countering expectations for a build ahead of the Northern Hemisphere winter.

The draw was led by a huge tumble in stockpiles at the Cushing, Oklahoma, delivery point for the NYMEX oil contract as companies drained storage tanks.

"Given the economics of what it takes to store oil, it makes no sense to hold on to inventory right now," said Stephen Schork, president of The Schork Report. "Storage owners are taking the economically prudent step and dumping inventories."

Retail heating oil prices in top oil consumer the United States shot to a record $2.95 a gallon last week on the winter supply worries.

Further price support came as the dollar plummeted to a record low against the euro. The weak greenback has boosted many dollar-denominated commodities in recent weeks.

FED CUT