One day after the price of benchmark crude took the biggest one-day drop this year, it headed up again.
Oil rose Wednesday after the Energy Information Administration reported that U.S. crude supplies unexpectedly dropped last week. The Energy Information Administration said supplies fell by 1.2 million barrels. Analysts expected supplies to grow by 2.1 million barrels, according to Platts, the energy information arm of McGraw-Hill.
Oil prices also got some support from Federal Reserve Chairman Ben Bernanke, who told a congressional panel that U.S. banks are in good shape and could withstand shocks from Europe, even if the debt crisis there significantly worsened.
Benchmark West Texas Intermediate crude rose $1.20 to finish at $107.27 per barrel in New York. Brent crude, which is used by many U.S. refineries to make gasoline, rose by 8 cents to end at $124.20 per barrel in London.
On Tuesday, WTI tumbled by $2.49, or 2.3 percent, to $106.07. It was pushed down by a pledge from Saudi Arabia to pump more oil to cover supply shortages and stabilize prices. There were also more signs that China's economy is slowing. China is the world's second biggest consumer of oil behind the U.S.
Including Wednesday's gain, WTI is up more than 8 percent this year while Brent is up about 16 percent. That's the biggest reason for rising pump prices. The national average jumped by nearly 2 cents to $3.864 per gallon on Wednesday. That's the highest ever for this time of year. Gas has risen 59 cents per gallon since Jan. 1.
The average pump price is above $4 a gallon in California, Connecticut, Illinois, New York, Oregon, Washington, Alaska, Hawaii and the District of Columbia. Wyoming has the lowest average in the U.S. at $3.45 per gallon.
The drop in crude supplies in the EIA report doesn't mean Americans are using more gasoline and other fuels. It mainly reflects a decline in imports to refineries that have slowed operations for seasonal maintenance. Gasoline demand at the wholesale level is down nearly 8 percent from the same time last year. A report Tuesday from the private research firm MasterCard SpendingPulse showed that Americans has bought less gasoline in each of the past 52 weeks, when compared with the same period a year earlier.
In other energy trading, heating oil fell 2 cents to finish at $3.22 per gallon. Gasoline futures lost less than a penny to end at $3.36 per gallon. Natural gas rose 2.5 cents to finish at $2.36 per 1,000 cubic feet.