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Surge Continues for Crude

Oil goes above $80 a barrel before pulling back a bit.
Author:

Updated from 12:02 p.m. EDT

Oil futures hit an intraday record high above $80 a barrel Wednesday after the Energy Department said last week's crude inventories dropped much more sharply than had been expected.

Crude for October delivery rose to $80.18 a barrel in New York before retreating to $79.91, still up $1.68 on the day and good enough for a second straight best-ever close. Natural gas advanced 50 cents to $6.44 per million British thermal units.

Heating oil was up nearly 4 cents to $2.22 a gallon, and reformulated gasoline gained 3 cents to $2.02 a gallon.

The moves came after the government said crude stores fell by more than 7 million barrels last week, compared with the roughly 2.7 million-barrel draw that had been predicted by analysts. Gasoline stocks were down by more than 660,000 barrels, compared with the anticipated 500,000-barrel decline.

Distillate inventories were more in line with estimates, rising by roughly 1.8 million barrels, about 100,000 less than had been forecast. Refinery utilization fell by 1.6 percentage points to 90.5%.

Meanwhile, traders were also keeping an eye on the newest storm system that has developed in the Gulf of Mexico, the home of considerable oil and gas operations.

According to the National Hurricane Center, a tropical depression has formed in the northwestern Gulf, and a tropical storm warning has been issued for the area from Port O'Connor, Texas, to Cameron, La.

The storm's maximum sustained winds are currently near 35 miles an hour, but the center predicts they'll pick up before the system hits land.

Also, east of the Lesser Antilles, another storm has organized into a tropical depression.

Turning to stocks,

ConocoPhillips

(COP) - Get Report

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gained 1.6% to $84.85, and

Exxon Mobil

(XOM) - Get Report

was up 0.8% at $87.65.

Chevron

(CVX) - Get Report

,

BP

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and

Royal Dutch Shell

(RDS.A)

also traded higher.

The CBOE Oil Index was better by 1.2%.