Oil rose over $72 a barrel on Wednesday after a US government report showed a big fall in crude inventories and a surprise drop in gasoline stocks, renewing supply worries during summer driving season.
US crude stocks fell a larger-than-expected 3.4 million barrels last week, the Department of Energy report showed. Gasoline inventories fell by 1 million barrels, countering expectations of a small increase.
"The numbers were more bullish than expected on both crude and gasoline," said Tom Bentz at BNP Paribas Commodity Futures. "Everyone has been kind of expecting that gasoline inventories were peaking and it kind of looks like this is the case."
US crude settled up 27 cents at $72.19 a barrel after trading as high as $72.77 earlier in the day. London Brent crude rose 44 cents to $71.42.
Prices also drew strength from closure of a key shipping channel in Louisiana, which limited output at three refineries ahead of the July 4 Independence Day holiday when travel is expected to be busier than ever.
"The shipping problems in Louisiana are supportive," said Mike Wittner of investment bank Calyon. "We're just ahead of the July 4th weekend, so every bit of gasoline output counts."
The US government has agreed to lend 750,000 barrels of crude oil from the Strategic Petroleum Reserve to refineries owned by Citgo Petroleum Corp and ConocoPhillips located near Lake Charles, Louisiana which have had supplies reduced because of the shipping problems. The Department of Energy approved a 250,000-barrel loan emergency crude stockpiles for Citgo's 440,000 barrel per day (bpd) Lake Charles refinery.
The plant has been cut off from new crude supplies after the Calcasieu Ship Channel was shut on June 21 because of an oil spill from Citgo's terminal facility. Citgo said the refinery's output was slightly reduced because of the closure.
ConocoPhillips also requested on Tuesday a 500,000-barrel loan for its 225,000-bpd refinery in Lake Charles. The US Coast Guard said Wednesday about nine miles of the channel had reopened and about 11 miles remained closed. The disruptions come just ahead of July 4 when peak summer travel in the United States is expected to increase despite high fuel prices, automobile group AAA said on Tuesday.
"That the economy is still doing OK and that the Fourth of July falls on a Tuesday makes it attractive for a lot of people to be vacationing," said Mantill Williams, the AAA's director of public affairs.
Adjusted for inflation, oil is at its most costly since 1980, the year after the Iranian Revolution, and is holding near the $75.35 record high hit in April after climbing from $20 at the start of 2002.
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