Oil nears record high
LONDON, April 9 (Reuters) – Oil jumped to more than $111 a barrel on Wednesday, within sight of a record high, after a U.S. government report showed a surprise drop in inventories in the world’s top fuel consumer.
U.S. crude oil stockpiles fell by 3.2 million barrels in the week to April 4 as imports declined, the U.S. Energy Information Administration said. Analysts expected a 2.2 million-barrel increase in stocks.
“It’s bullish across the board. A very low crude import number got us a surprise draw there,” said Tim Evans, analyst at Citigroup Futures Research. “Imports are basically running behind year-ago levels.”
U.S. crude was up $2.50 to $111.00 a barrel by 1507 GMT, nearing the record high of $111.80 hit on March 17. London Brent hit a record $108.77 and later pared gains to $108.10.
As well as the drop in crude stockpiles, the U.S. inventory report also showed larger-than-expected declines in stocks of distillates and gasoline.
Concern about diesel supply given strong demand in Europe and Asia also supported crude. London gas oil also hit a record high of $1,026.75 a tonne on Wednesday.
Oil also rose in reaction to further weakness in the U.S. dollar.
The dollar fell against the euro and the yen on views the Federal Reserve could cut interest rates by a substantial 50 basis points this month amid worries of a possibly severe U.S. economic downturn.
A weak dollar tends to raise prices for commodities denominated in the currency by boosting non-U.S. spending power and by attracting investors seeking an inflation hedge.