US crude oil futures rose on Thursday to hit a 31-month high settlement after a volatile trading session that saw a weak dollar attract investors seeking alternative assets. US gasoline futures surged for a sixth straight session, driving prices to the highest level since July 2008 as the world's top consumer gears up for driving season. Brent crude held steady after closing in on its 2011 high.
"The Fed did not give commodities traders any reason to think that the dollar's fall will be stemmed, creating incentive to keep buying commodities," said Stephen Schork, president at the Schork Group in Villanova, Pennsylvania. US crude for June delivery settled up 10 cents at $112.86 a barrel, the highest since September 22, 2008's close at $120.92.
In London, ICE Brent June crude ended at $125.02, off just 11 cents, after dropping to a session low of $124.07. It hit a session high of $126.66, near its 2011 high of $127.02, reached on April 11. Less than an hour before the day's trading ended, US crude volume was about 494,000 lots, 15 percent below the 30-day average. In London, Brent volume hit 373,000 lots, 4 percent below the 30-day average.
Volatile trading on both sides of the Atlantic came as other commodity bellwethers soared, with silver surging to an all-time high near $50 an ounce and gold leaping to a lifetime high of $1,538.35. US gasoline futures extended gains, with the front-month May contract closing at $3.4298 a gallon, up 1.04 cents, rising for the sixth day in a row and marking the highest settlement since the July 14, 2008 close at $3.5577.
Gasoline found support from refinery problems following a power outage in Texas City, Texas and 10 straight weeks of inventory draws that level stockpiles of the fuel at the lowest level since August 2009, according to US government data. Rising pump prices have fed concern about a potential drop in demand. The US Energy Information Administration reported US oil demand in February was 762,000 barrels per day less than previously estimated, up only 9,000 bpd from a year earlier.
Oil prices rallied early as the dollar weakened after data showed US economic growth slowed in the first quarter, as higher food and gasoline prices sent inflation rising to its fastest pace in 2-1/2 years. Also, the number of Americans seeking jobless relief unexpectedly rose last week, adding to worries about the economy.