The price of oil pushed above $105 a barrel Wednesday after a report indicated that U.S. crude stockpiles fell by far more than expected last week, in a potential sign of growing demand in the world's largest economy.
By early afternoon in Europe, benchmark crude for August delivery was up $1.61 to $105.14 a barrel in electronic trading on the New York Mercantile Exchange. Oil was trading at its highest price since early May 2012.
The advance came after figures from the American Petroleum Institute, an industry group, reportedly found that U.S. crude inventories last week fell by 9 million barrels, way more than the 3.8 million expected in a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
"Last week saw an unexpectedly sharp reduction in U.S. crude oil stocks," analysts at Commerzbank in Frankfurt said. "According to the API, they declined by 9 million barrels, destocking on a similarly high scale having already been recorded a week earlier. Despite higher levels of crude oil processing, gasoline stocks dropped by 3.5 million barrels, which suggests that demand picked up again in the run-up to the Independence Day weekend."
The Energy Department releases its weekly report on U.S. inventories of crude oil and refined fuels — the market benchmark —later Wednesday.
A drop in supplies would suggest stronger demand and underline the signs of economic recovery shown in last week's stronger-than-expected U.S. hiring report.