Oil hits one-year high over $77
Oil prices jumped more than 2 percent on Thursday, touching a one-year high after government data showed a steep, unexpected drop in U.S. gasoline and distillate inventories.
Gasoline inventories fell by 5.2 million barrels in the week to October 9 against analyst expectations for a build, according to the U.S. Energy Information Administration, while distillate stockpiles also fell unexpectedly.
U.S. inventories of crude rose slightly.
U.S. crude for November delivery rose $1.53 to $76.71 a barrel by 1:12 p.m. EDT, after climbing as high as $77.39, its highest since October 15, 2008.
London Brent crude gained $1.04 to $74.14 a barrel.
Energy markets have been looking for signs of a rebound in demand, which has been battered by the global economic crisis.
The EIA report showed demand for gasoline rising and total products rose against year-ago levels last week, but analysts said the main reason for the draw in product inventories was the steep drop in refinery runs.
What stands out is the big draw in the gasoline, said Gene McGillian, analyst for Tradition Energy, in Stamford, Connecticut.
But when you look at the numbers more closely, you see that there was such a large decline in refinery utilization rates, it makes you wonder how bullish this is for the crude market (if) they are dropping refinery rates because there are no good margins in cracking oil anymore, he added.
Energy shares got a boost as the crude price jumped, lifting equities markets.
Crude fell earlier in the session after data came out showing Goldman Sachs'
Oil traders have been watching equities markets as well as broader economic data for signs of an end to the recession, which could lift fuel demand.
U.S. Labor Department data showed initial claims for state unemployment benefits in the United States fell unexpectedly by 10,000 to a seasonally adjusted 514,000 in the week ended October 10, the fifth such decline in the last six weeks.
Crude is now in positive territory on a year-on-year basis for the first time since October 10, 2008. The six straight days of gains mark its longest winning streak since July.
(Reporting by Matthew Robinson, Gene Ramos, and Robert Gibbons in New York and Christopher Baldwin in London; Editing by Christian Wiessner)
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