Oil prices rose above $109 a barrel Wednesday in Asia after a report showed U.S. gasoline supplies fell for a second week, suggesting higher fuel costs haven't yet curbed demand.
James Moody fills up his car's tank with gasoline Tuesday, March 22, 2011, in St. Louis. Oil prices rose above $104 per barrel Tuesday as traders continued to focus on a series of international crises that will drive world supply and demand this year. By ALEX KENNEDY, Associated Press
SINGAPORE (AP) — Oil prices rose above $109 a barrel Wednesday in Asia after a report showed U.S. gasoline supplies fell for a second week, suggesting higher fuel costs haven't yet curbed demand.
Benchmark crude for June delivery was up 86 cents at $109.14 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 59 cents to settle at $108.28 on Tuesday.
In London, Brent crude for June delivery was up 60 cents to $121.93 a barrel on the ICE Futures exchange.
The American Petroleum Institute said late Tuesday that gasoline inventories fell 1.8 million barrels last week, following a plunge of 7 million barrels the previous week. The API also said crude supplies rose 667,000 barrels while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 1.6 million barrels.
The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.
Traders have been watching closely for signs that the 29 percent jump in oil prices since mid-February will undermine demand, but strong consumption numbers from the U.S. and China suggest that it hasn't yet.
"There is little in the way of solid evidence that oil demand growth has slowed down from the unsustainably high pace of growth seen in 2010," Barclays Capital said in a report.
Some Asian analysts expect higher fuel costs to quicken inflation and lead central bankers in the region to boost lending rates. China, South Korea and Thailand are likely to raise rates the most while oil price subsidies should lessen the impact of higher global energy costs in Indonesia, Malaysia and India, Credit Suisse said in a report.
"The oil price shock will encourage a more hawkish monetary policy stance in the short term than would otherwise have been the case," Credit Suisse said. "Fiscal policy on the other hand will probably be somewhat more stimulative as governments attempt to shield the lowest paid from the harshest effects of the commodity price surge."
In other Nymex trading in May contracts, heating oil rose 1.5 cents to $3.17 a gallon and gasoline gained 1.6 cents at $3.25 a gallon. Natural gas futures were up 3.5 cents at $4.30 per 1,000 cubic feet.