Oil Tops $105 a Barrel While Gasoline Prices Surge to $3.50

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Crude oil for August delivery jumped past $105 a barrel in Wednesday’s trade, their highest level in more than a year, following data that showed a draw down in weekly U.S. supplies, more than twice the amount analysts expected.

The U.S. Energy Information Administration (EIA) reported a 9.9 million-barrel decline in crude stockpiles for the week ended July 5 while analysts polled by Platts were looking for a 3.8 million-barrel decline. The latest decline follows the more than 10 million-barrel drop the EIA reported for the week ended June 28.

The draw down in crude oil supplies partly stems from an upgrade to a large BP refinery in Whiting, Indiana, which enables the refinery to process 250,000 more barrels of oil per day – oil that comes out of crude stockpiles. But according to CNN reports, the broader factor is that the oil industry has gotten better at lessening surplus crude supplies.

Crude supply levels remain above the five-year averages, though further inventory declines are expected in the weeks to come are pushing prices higher.

Meanwhile, the EIA also reported that gasoline supplies fell by 2.6 million barrels while distillate stockpiles increased by 3 million barrels. Gasoline stockpiles were expected to rise by 1.2 million barrels, while forecasts called for an increase of 1.4 million barrels for distillates.

Average gas prices in the U.S., which had declined in recent weeks, are now trending higher, up roughly $0.02 a gallon to $3.50.

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