Oil prices rally on big fall in US gasoline stockpiles

New York: Oil prices rose sharply Wednesday as falling US gasoline inventories boosted the demand outlook in a global market awash in crude supplies.

US benchmark West Texas Intermediate (WTI) for delivery in April jumped $1.49 (4.9 percent) to $37.99 a barrel on the New York Mercantile Exchange, the highest level in more than three months.

In London, Brent North Sea crude for May delivery, the European benchmark for oil, leaped to $41.07 a barrel, up $1.42 (3.6 percent) from Tuesday`s settlement.

On Wednesday, the US Department of Energy`s petroleum report showed US commercial crude stockpiles up 3.9 million barrels in the week ending March 4.

CMC Markets analyst Jasper Lawler said the crude build was "well below the shockingly large build seen last week," which totalled 10.4 million barrels.

More significantly, gasoline inventories dropped by 4.5 million barrels, three times the estimate.

And inventories of distillates, including diesel and heating fuel, fell by 1.1 million barrels, instead of the 900,000-barrel rise expected.

"The drawdown in gasoline was bigger than traders were looking for, that really propped things up quite a bit," said Oliver Sloup of iiTrader.com.

Sloup said that the European Central Bank`s policy meeting Thursday was adding some support to commodities amid expectations the ECB will announce additional stimulus for the flagging eurozone.

He said that a bigger-than-anticipated stimulus package could put the euro under selling pressure and lift the dollar, "and that could potentially put a short-term lid on crude oil" which is priced in dollars.