Oil jumped to a fresh record high above $74 a barrel today after a steep drop in US gasoline inventories fuelled fears of tight summer supplies at a time of growing anxiety over Iran's exports.
The US yesterday reported a larger-than-expected drop in gasoline inventories of over 5 million barrels, adding to concern created by the shutdown of almost a quarter of Nigeria's oil output and the row over Iran's nuclear programme.
"We've gone from comfortable US gasoline stocks to average and seem to be heading very clearly toward the low of the range," said Deborah White of SG SIB Commodities in Paris. "The market is worried about that."
London's Brent crude climbed as high as $74.22 a barrel, its eighth consecutive session to mark a new peak. It was trading down 3 cents at $73.70 a barrel by 11.32am.
US May crude oil futures were down 3 cents to $72.14, hitting an all-time high of $72.49 earlier.
Gasoline stocks in the US fell as demand averaged over 9.1 million barrels per day (bpd), 0.8 percent more than a year earlier, the US Energy Information Administration (EIA) said.
"It's all about gasoline and it has been since January," said US consultant PFC Energy in a report, adding that stocks are at the bottom of a five-year range in terms of days of supply.
Oil's surge is part of a broader rally in commodities as investors seek to beat the returns available in equities or bonds. Gold hit a 25-year peak, silver reached a new 23-year high and platinum soared to a record today.
"We continue to see fund action," SG's White said. "They are coming in across the basket of commodities."
Oil prices have nearly tripled since 2002 and analysts see few signs of the rally coming to a halt as levels push closer to 1980 inflation-adjusted peak of $82 a barrel, setting alarm bells ringing in consuming nations.
Record oil costs so far have yet to derail growth in oil demand or the world economy. "We are not seeing any material demand destruction even at these prices," said Finlay MacDonald at Britannic Asset Management, who helps run more than $30 billion in UK equities, including BP and Royal Dutch Shell.
China, the world's second-largest oil consumer, said today that its gross domestic product in the first quarter had grown 10.2 per cent from a year earlier, marking a pick-up from 9.9 per cent in the fourth quarter.