Crude oil rallied more than 4 U.S. dollars a barrel Wednesday as the U.S. crude and gasoline inventories declined unexpectedly last week.
Light, sweet crude for September delivery rose 4.58 dollars to settle at 126.77 dollars a barrel on the New York Mercantile Exchange. Futures hit 127.39 dollars a barrel during the afternoon trading, marking a biggest one-day rally of 5.20 dollars since July 10.
The U.S. Department of Energy reported Wednesday that the U.S. gasoline stockpiles dropped by 3.5 million barrels last week. Surveys by energy research firms and Bloomberg had expected the number to increase. Meanwhile, crude inventory also fell by 100,000 barrels last week. Analysts believed that these data signaled that high oil prices might not have curbed the U.S. fuel demand as much as previously estimated.
Worries of the disrupted crude exportation from Nigeria, Africa's largest oil producer, also helped to boost price on Wednesday. Royal Dutch Shell PLC announced Tuesday that it may not be able to fulfill some oil export contracts after two of its pipelines in southern Nigeria were attacked early Monday morning.
Another geopolitical factor to weigh on crude Wednesday is the news that Israeli Prime Minister Ehud Olmert will step down in September, prompting some investors to concern about the Middle East peace process and the ongoing tension in Iran.
The investment bank Goldman Sachs reaffirmed Wednesday that the crude oil will rise to near 150 dollars a barrel by the end of this year. The Goldman report said the flagging U.S. energy demand is "transient rather than permanent," and the fundamentals of falling oil supply and increasing global energy consumption remain intact.
In London, Brent crude for September delivery surged 4.39 dollars to settle at 127.10 dollars a barrel on the ICE Futures Exchange.
Source: Xinhua
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