EIA report sends WTI sharply higher

A declining dollar and an oil inventories report that was lower than anticipated sent crude oil prices sharply higher on Wednesday.

The US Energy Information Administration reported that crude oil inventories neither grew nor declined in the week ending 21 March 2008, holding steady at 311.8 million barrels, while gasoline stockpiles dropped 3.3 million barrels and distillates in storage fell 2.2 million barrels during the week.

While gasoline stocks dropped much more than had been forecast, they remain 19 million barrels higher than last year’s levels.

A major factor in the week’s decline in gasoline inventories, considering that demand dropped by 1.3 percent last week, was a drop of 1.7 percent in refinery activity to 82.2 percent of capacity.

May contracts for West Texas Intermediate crude jumped $4.98 to $106.20 per barrel in afternoon trade on the New York Mercantile Exchange while Brent crude was up $3.24 to $103.34 on the ICE Futures Europe exchange in London.

Nymex April gasoline was up 3 cents to $2.71 per gallon and May heating oil added 11 cents to $2.96 per gallon while May natural gas gained 19 cents to $9.71 per million British thermal units.