Oil prices surged to record levels Wednesday, surpassing $112 a barrel, after a U.S. government report showed a surprising decline in U.S. petroleum inventories. Light sweet crude for May delivery rose $2.37 to settle at $110.87 a barrel on the New York Mercantile Exchange, a new closing high. Oil also set a new intraday high of $112.21 earlier in the session. The previous intraday high of $111.80 was set March 17, while the previous closing high of $110.33 was set March 13. In its weekly inventory report, the Energy Information Administration (EIA) said crude supplies fell by 3.2 million barrels last week. Analysts had expected a gain of 2.4 million barrels. Gasoline inventories fell by 3.4 million barrels, significantly more than the decline expected by analysts. Supplies of distillates—including diesel, heating oil, and jet fuel—fell by 3.7 million barrels, three times the decline analysts had expected. U.S. average retail gasoline prices also hit a new record high of $3.43 a gallon (3.8 liters) on Wednesday. The record came despite the fact that demand for gasoline was up only 0.3 percent compared to the same period a year ago, EIA said. Gasoline demand usually grows at about 1.5 percent per year, but the slowing U.S. economy and rising prices have led consumers to reduce their driving. Analysts said U.S. refiners are making less gasoline, which is contributing to the surge in prices, especially as the summer driving season approaches. Refineries are running at 83.1 percent capacity, EIA said. They should be running at 89 percent to 90 percent this time of year, analysts said.
