Oil gains on U.S. crude inventory drop
LONDON (Reuters) - Oil surged nearly 2 percent on Wednesday after surprise declines in U.S. crude and gasoline inventories raised concerns about supplies in the giant energy market.
U.S. crude CLc1 settled up $1.13 to $61.82 a barrel, after hitting a high of $62.10. London Brent crude LCOc1 climbed $1.11 to $62.50.
U.S. crude stockpiles dropped 4.8 million barrels last week after persistent fog along the key Gulf Coast refining and transit hub disrupted imports, data from the Energy Information Administration showed. Analysts had forecast a 2 million barrel rise in stocks. <EIA/S>
"The data definitely comes out supportive, with a larger-than-expected draw on gasoline and the draw in crude when we were expecting a build," said Eric Wittenauer at A.G. Edwards.
World energy markets are closely watching fuel stockpiles in the United States, the world's biggest oil consumer, ahead of spring when gasoline demand starts to climb.
Gasoline inventories fell 3.8 million barrels last week, while distillates declined 1.3 million barrels, the EIA said.
Oil has held near $60 a barrel despite the sell-offs in some equity markets over the last week. U.S. crude is more than $10 up on mid-January levels and three times the level from the start of 2002.
"The main thing has been the increase in market volatility in the last few days -- equities, bonds and commodities," said Jim Stride, Managing Director of AXA Investment Managers UK.
"But we see reasonably stable dynamics in the oil market."
U.S. Treasury Secretary Henry Paulson on Wednesday predicted stable growth for the economy nSEO328419 of the world's biggest oil consumer and the government said its fuel consumption would remain strong ID:nN06435299.
Traders were also keeping a wary eye on OPEC member Iran's standoff with the West over its nuclear program.
EU powers urged Iran on Wednesday to embrace a U.N. idea of a "timeout" from nuclear activity they fear could yield atom bombs, saying sanctions they sponsored against Tehran would be simultaneously suspended.
Iran rejected the overture, insisting its bid for nuclear energy was peaceful, legal and nonnegotiable.
(Additional reporting by Cho Mee-young in Singapore; Alex Lawler in London, Matthew Robinson and Richard Valdmanis in New York)
