NEW YORK – Oil prices jumped Wednesday, pushing above $80 in New York, as traders digested data showing sliding crude stockpiles in the United States, a possible sign of firming economic conditions.
New York's main contract, light sweet crude for delivery in December spiked as high as $81.06 per barrel, before pulling back to close at $80.40, up 80 cents from Tuesday.
In London, Brent North Sea crude for December delivery climbed 78 cents to settle at $78.89 a barrel.
The US Department of Energy (DoE) announced Wednesday that US crude reserves sank by four million barrels in the week ending October 30, surprising analysts expecting a rise.
The DoE added that there were also small drops in stockpiles of gasoline (petrol) and distillates, which include heating fuel and diesel.
Andy Lipow at Lipow Oil Associates said the inventory data "was a very big surprise to the market and that coupled with a weaker dollar contributed to the market rallying."
He said the Federal Reserve announcement later in the day -- keeping near-zero interest rates with no hint of a change in policy -- also buoyed sentiment.
"The perception is that as the economy grows, people have more money in their pocket, they can spend more money that translates into higher petroleum demand," he said.
Mike Fitzpatrick at MF Global said traders were searching for signs of a pickup in economic activity, which would boost demand for energy and lift prices.
"Waxing and waning sentiment focusing on a recovery is again dominating participants' trading decisions," he said.
"Is there a recovery under way? Will a recovery be sustainable? Will consumers open their wallets again?"
He said the situation may become clearer after the monthly US jobs report on Friday, which is expecting to show job losses narrowing to around 175,000 in October.
"It will be recorded as a definite positive if job losses are 200,000 or less," Fitzpatrick said.
"As the economy appears to be improving, economists' repeated exhortations over the years for Americans to consume less and for the Chinese to consume more looks to be coming true.
Purvin and Gertz analyst Victor Shum said prices were unlikely to hold above $80 owing to concerns about weak energy demand amid mixed signals on the state of the global economy.
"When oil gets close to the $80 level and the market tends to focus more on the high inventories of crude oil and fuel globally, it is difficult to surge through $80 and sustain above the $80 level," Shum said.
Oil prices had already leapt on Tuesday as commodities gained a boost from gold futures, which have struck a series of record highs.
The price of gold surged to a record peak in the wake of the International Monetary Fund's massive sale of the precious metal to India.
Gold and other commodity prices have surged in recent months amid a move away from the dollar, which has been slumping. The move accelerated last month on a report that Gulf states may stop using the greenback for oil trading.
