Oil prices jump to high for the year

SIOUX FALLS, S.D. (AP) — Oil prices surged to a 2009 high Wednesday after a government report showed that unused crude being placed in storage slowed a bit last week.

Benchmark crude for June delivery rose 4.6 percent, or $2.50, to settle at $56.34 a barrel on the New York Mercantile Exchange. It was the highest close since mid-November.

Demand for energy during the recession has been decimated, leaving storage facilities more bloated than in any year since Iraq’s invasion of Kuwait in 1990.

Prices for crude and gasoline have plunged as a result, providing a break for everyone from industrial companies to consumers, though that must be taken in the context of shuttered factories and layoffs.

In that same context, however, government data that in a normal year might send energy prices falling, actually sent them up across the board Wednesday.

Prices for oil, natural gas, heating oil and gasoline all rose on data showing levels of crude in storage continues to rise. What sent prices sharply higher, however, is that levels did not rise more than they did.

Crude levels for the week ended May 1 rose by 600,000 barrels to 375.3 million barrels, the Energy Department’s Energy Information Administration said in its weekly report. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had expected a build up of 2.2 million barrels.

An overnight report from the American Petroleum Institute even showed a 1-million-barrel slip in crude oil stocks and a 2.9-million-barrel drop in gas supplies.

In a market environment where everyone is looking for scraps of good news, it provided a shot of optimism that the economy may be on the mend.

“A sign that demand is improving perhaps? Or maybe those refiners are still indifferent to increasing supply,” Phil Flynn, an analyst at Alaron Trading Corp., wrote in a morning note. “It was probably a little of both.”

Meanwhile, the national retail average price for a gallon jumped more than 3 cents overnight to $2.11 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That is about 7 cents a gallon below what it was a month ago, but $1.50 below its year-ago price.