Oil prices rallied again on Wednesday as new data showed more unexpected declines in domestic inventories of crude oil and distillates like diesel fuel and heating oil.

In midday trading, the benchmark contract for November delivery of crude oil was up 49 cents at $33.48, after rising overseas following the release late Tuesday of the

American Petroleum Institute's

weekly inventory report.

"It comes down to this: Consumers are buying aggressively and refiners aren't," said Tim Evans, senior energy analyst at

IFR-Pegasus

. "Consumers got scared to an even greater degree than they were earlier."

According to the weekly report released by the

American Petroleum Institute

, an industry group, crude oil stocks fell by 3.1 million barrels in the week ending Oct. 13. That's the second consecutive weekly draw. The API reported that oil inventory levels dropped by 3.9 million barrels in the previous week.

The

Energy Information Administration

, a division of the

Department of Energy

, had reported that oil inventories rose two weeks ago by a million barrels. But its most recent survey showed a draw of 4.5 million barrels last week, even more than the API reported.

The market tends to look to the EIA data for confirmation of the API numbers, as the government survey is more inclusive. While the two agencies' reports diverged last week, the latest data is particularly unsettling as both agencies reported similar declines in crude oil, gasoline and distillate stock levels.

The API reported that distillate stock levels fell by a half-million barrels last week, while the government estimated that distillate stocks fell by 900,000 barrels. According to the API, refinery capacity fell slightly to 92.7%, though that may be partly a result of the maintenance work regularly conducted during this time of year on many facilities.

Gasoline stocks showed an even larger decline, with the API reporting a 3.676 million-barrel decline, while the EIA estimated a drop of 2.5 million barrels last week.

In midday trading, the November heating oil contract was trading up 1.2 cents at 97.2 cents. The contract for November delivery of unleaded gasoline was up 1.7 cents at 93.7 cents.

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Demand for distillates and gasoline continues to climb. Analysts at London-based

GNI

pointed out that demand for gasoline was exceptionally high at more than 9 million barrels per day, 1 million barrels a day higher than the week before.

Demand for distillates implied by the decline in stock levels amounts to 4.1 million barrels per day, an 11.5% jump from the previous year, as consumers stock up in anticipation of dwindling supplies, and higher prices, in the coming months.

Concerns over tight supplies were not helped by the latest crude oil inventory data. The drop in crude oil stocks contradicts both consensus expectations for a 2 million-barrel buildup and the seasonal pattern, which calls for an increase of 700,000 barrels, according to Tyler Dann, an energy analyst at

Banc of America Securities

.

Crude oil inventories remain disturbingly close to the 24-year lows reached in late summer. However, Dann pointed out that the 30 million barrels of oil

released from the nation's

Strategic Petroleum Reserves

are not physically in the market yet.

In a report Wednesday, Thorsten Fischer, an economist who analyzes the energy sector for

Economy.com

, said that markets had, nonetheless, expected an increase in crude oil inventory levels, as new oil arrived -- in particular, from members of the

Organization of Petroleum Exporting Countries

, which approved an 800,000-barrel-per-day increase in oil exports beginning this month.

Even though the SPR oil has yet to arrive, Fischer predicts that the decline shown in the latest inventory data is likely to keep crude oil prices well above $30 a barrel and increase the likelihood for further price spikes as the market remains very sensitive to any potential disruption of the supply of oil.

Industry analysts remain

skeptical about how much additional oil will actually be exported under OPEC's approved increase in production quotas. Government and independent agencies figure most OPEC members are now producing at or very near their capacity. Only the United Arab Emirates and Saudi Arabia, the world's largest oil exporter, are believed capable of any substantial production increases.

There are also concerns that the SPR release might actually hurt imports, as refiners hold off on current purchases in anticipation of the delivery of the SPR oil. Still, though oil remain above $33 a barrel, Evans insists, "If we didn't know that 30 million barrels was on its way, the price would be higher."