US crude oil prices rose on Wednesday, snapping two days of losses, getting a lift from data showing US gasoline stockpiles plunged last week and from lingering worries about the Libyan conflict. US crude for May delivery settled up 86 cents at $107.11 a barrel. In London, Brent May crude gained $1.96 to settle at $122.88.
US gasoline inventories fell 7 million barrels last week, the biggest weekly drop since October 1998, to 209.7 million barrels, their lowest level since October last year, data from the US Energy Information Administration showed. "The gasoline stocks data was really supportive today," said Andy Lebow, broker at MF Global in New York.
The big drop in US gasoline supplies came amid rising pump prices, with last week's national average climbing to $3.79 a gallon after crude prices rallied to 2-1/2-year highs. Rising US gasoline prices have damaged confidence in the country's future and forced Americans to adjust spending habits and lifestyles, a Reuters/Ipsos poll found.
US crude inventories rose 1.6 million barrels to 359.3 million barrels, their sixth straight week of gains, helping pull down crude futures briefly around midday. That dip came as the dollar strengthened ahead of a speech by US President Barack Obama outlining his proposal to cut the ballooning US budget deficit.
"The market seemed to take seriously this lurch toward fiscal austerity from Obama. The numbers on the initial release appeared compelling. Hence, dollar rallied a bit, pushing down energies and precious metals," said John Kilduff, partner at Again Capital LLC in New York. Oil prices rose early after a two-day sell-off that was driven by cautious comments from Goldman Sachs. The influential bank said a robust crude rally looked overdone.
The International Energy Agency and the Organisation of the Petroleum Exporting Countries also raised a red flag on skyrocketing prices, saying they could hurt global demand. The civil war in Opec member Libya has shut off most of its production, which was around 1.6 million bpd before unrest began. Rebel-controlled oil fields are pumping around 100,000 barrels per day, but only a "minimal amount" is being exported, a rebel spokesman said on Wednesday.
He spoke in Qatar, where talks were ongoing on Libya's future. International powers called for the first time for Muammar Qadhafi to step aside, but Nato members squabbled over launching more air strikes to help topple him. Opec spare capacity should be enough to cope with such an outcome, provided the upheaval does not embroil other producer nations. Saudi Arabia alone has more than 3 million bpd to spare.