Oil Back in Record Territory

Crude futures rose to their highest level ever Wednesday as extremely bullish inventory figures from the Energy Information Administration combined with the expectation for a rate cut to send prices soaring.

December light sweet crude climbed $4.15 to end at $94.53 a barrel on the New York Mercantile Exchange, and earlier, it went all the way to $94.74. Reformulated gasoline rose 8 cents to $2.34 a gallon. Heating oil climbed 9 cents to $2.51 a gallon.

Natural gas jumped 31 cents to $8.33 per million British thermal units.

On Tuesday, oil fell by more than $3 a barrel, but the weakness wouldn't last, not with the price-boosting inventory report being released. The EIA said in its latest petroleum recap that crude stores fell by 3.9 million barrels during the week ended Oct. 26. Analysts were expecting a 400,000-barrel increase in crude stores.

Distillate inventories rose by 808,000 barrels, whereas a 1 million-barrel draw was forecast. Motor gasoline stores grew by 1.3 million barrels, compared with the 200,000-barrel decline that analysts were anticipating.

"Today's oil market was overwhelmed by the fact that crude inventories fell as far as they did," according to Jim Williams, energy economist at WTRG Economics.

The main cause to the disruption in inventories was the decline in oil production and exports from Mexican producer Pemex, according to Williams. The fact that most of the reduction in inventories occurred in the Gulf Coast region supports this argument.