The price of oil surged to near $103 a barrel Thursday after a U.S. inventories report showed a larger-than-expected drop in crude oil supplies.
By early afternoon in Europe, benchmark U.S. crude for August delivery was up $1.64 at $102.84 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the Nymex contract added $1.24 to close at $101.20.
On Wednesday, the U.S. Energy Information Administration said U.S. crude oil inventories fell by 7.5 million barrels to 375 million barrels in the week of July 11. The fall was bigger than expected and attributed to increased refinery activity. Analysts had forecast a drop of 3 million barrels, according to a survey by Platts, the energy information arm of McGraw Hill Financial.
Last month, supply concerns caused by conflicts in Iraq jacked up the price of oil to above $107 per barrel. But the price drifted lower as Iraqi insurgents failed to advance and oil exports remained unaffected. Libya's comeback to the oil market also pushed down prices, though experts remained cautious.
"The performance of oil prices in the next few weeks is likely to be dictated above all by the development of Libyan oil supply," said a note to clients from analysts at Commerzbank in Frankfurt. "Since it will doubtless take some weeks before the oil terminals are fully operational again, the oil supply from Libya is unlikely to increase noticeably in the short term."
New sanctions announced by Washington against Russia over the conflict in Ukraine were seen giving some support to prices, though their impact wasn't expected to be immediately significant. Energy firms Novatek and Rosneft have been barred from getting long-term loans from U.S. entities.
Brent crude, a benchmark for international oils, was up 87 cents to $108.04 on the ICE Futures exchange in London.
In other Nymex trading:
— Wholesale gasoline was down 0.38 cent to $2.852 a gallon.
— Natural gas dropped 6.4 cents to $4.055 per 1,000 cubic feet.
— Heating oil rose 1.26 cents to $2.882 a gallon.