Oil price rises as U.S. supply falls
NEW YORK -- Oil prices rose above $61 a barrel Wednesday, riding gains on Wall Street and a government report that said U.S. crude supplies dropped more than expected.
Benchmark crude for August delivery was up $1.59 to $61.11 a barrel on the New York Mercantile Exchange. In London, Brent prices rose $1.49 to $62.35 a barrel on the ICE Futures exchange.
During the past few weeks, crude fell from its peak and has loitered near $60 a barrel as America's expanding population of unemployed workers left doubts about a quick economic recovery. A weaker dollar combined with a rally in equities markets has kept oil prices from falling further, however.
The Dow Jones Industrial Average and The Nasdaq composite index rose more than 2 percent in midday trading.
Crude barrels, which are traded in dollars, go up in price as the dollar falls and foreign investors find they have more buying power. Investors also see crude as a safe haven from inflation, and they've pumped money into oil futures on the expectation that oil will get more expensive as the economy improves.
Meanwhile, the Energy Information Administration reported Wednesday that the country's supply of crude oil dropped more than expected last week, falling by 2.8 million barrels. However, the U.S. is still swimming in surplus oil. It's total inventory of 344.5 million barrels is 16.5 percent above last year's levels.
Inventories of gasoline and distillate fuels, such as diesel and heating oil, also rose last week.
Rising world stock markets also propped up crude prices, with major exchanges logging gains in the wake of better-than-expected earnings reports from Intel and Goldman Sachs.
Trader and analyst Stephen Schork said prices could swing either way in the next few days, setting a longer-term trend.
In other Nymex trading, gasoline for August delivery jumped by 4.29 cents to $1.6895 a gallon and heating oil added 5.32 cents to $1.5651 a gallon. Natural gas for August delivery fell by 11.3 cents to $3.316 per 1,000 cubic feet.