Oil jumps USD 5 after report of US Gas stocks falling

by Sanjay Jha | July 31, 2008 at 01:24 am

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Crude oil prices again soared up after remaining cool for sometime. The news of US Gas stock shortage fulled the price hike. A latest report says that US gasoline supplies fell by 3.5 million barrels last week. US crude stockpiles also fell by 100,000 barrels last week, less than the 1.3 million barrels analysts had predicted.

Oil prices shot up on Wednesday, jumping as much as USD 5 a barrel and halting a dramatic two-week slide after the government reported a surprise drop in gasoline supplies.

Also supporting prices was news that Israeli Prime Minister Ehud Olmert will step down in September, a move that raised doubts about progress for US-backed Middle East peace efforts in the oil-producing region.

The big advance raised questions whether crude's steep decline was overblown, but also whether the pullback has now brought prices closer in line with flagging US demand. Still, analysts offered mixed views on whether prices would return to record levels hit earlier this month, with some saying crude could surge higher and others calling today's rebound a temporary bump.

Light, sweet crude for September delivery soared USD 4.53 cents to USD 126.72 a barrel in afternoon trading on the New York Mercantile Exchange. Earlier, prices jumped more than USD 5 a barrel, marking crude's biggest one-day rally since July 10, when prices ended USD 5.60 higher. The contract had fallen below USD 121 a barrel earlier in the day, and closed USD 2.54 lower yesterday at USD 122.19 a barrel.

In London, September Brent crude rose USD 3.34 cents at USD 126.05 a barrel on the ICE Futures exchange.