Randy Fabi / Reuters
London: Oil hit a new record high above $78 on Wednesday, 1 August, after a larger-than-expected drop in crude inventories in the United States.
US crude rose to an intraday high of $78.77 a barrel, surpassing the previous peak of $78.40 reached in July 2006. The September contract was trading up 31 cents at $78.52 by 1457 GMT.
London Brent fell 29 cents to $76.76.
Crude oil stocks in the world’s largest energy consumer tumbled 6.5 million barrels, the Energy Information Administration said, surpassing analysts’ expectations for a 700,000 barrel decline.
“These numbers are enough to keep the (crude) rally alive,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Crude oil stocks were lower in every region of the country, including the delivery point at Cushing, Oklahoma, for the New York Mercantile Exchange futures contract.
“The crude draw is quite impressive and crude will drive the market as it has in recent days, and products will ride along,” said Tom Knight, trader with Truman Arnold.
Gasoline supplies rose 600,000 barrels for the week to 27 July, while distillates jumped 2.8 million barrels.
Oil has surged more than $8 over the past month despite a bout of risk aversion that has hit equity markets amid escalating sub-prime lending woes in the United States.
Analysts attribute the bullish sentiment to an influx of fund money, geopolitical tensions, and OPEC’s reluctant to raise production.
OPEC, which meets again on 11 September to discuss pre-winter policy, has said it sees no need to unwind the two production cuts it agreed in late 2006 as long as inventories are high.
— Additional reporting by Jonathan Leff in Singapore and Janet McBride in London