NEW YORK (AP) — The price of oil on Wednesday briefly hit $90 per barrel for the first time since May after the government said U.S. oil demand is on the rise.
The Energy Information Administration reported that average oil demand increased last week in the U.S. for the third week in a row. Oil demand had been down most of the year, when compared with 2011, as manufacturing activity slowed and drivers cut back on travel.
"We keep talking about the slow economy, but the market is seeing some improved oil demand today," said Phil Flynn, an analyst at Price Futures Group.
Benchmark U.S. crude rose by 65 cents to end the day at $89.87 per barrel in New York. It hit $90.04 per barrel earlier in the day, the highest since May 30.
Brent crude, which sets the price for oil imported into the U.S., rose by $1.16 to end at $105.16 per barrel in London.
EIA's weekly petroleum report also noted a surprise drop in gasoline supplies last week as refineries pulled back on production. Oil supplies also fell, though the drop was less than what analysts expected.
Meanwhile, China's biggest companies warned of sharp drops in profits this year. That country's economy is still growing at a much faster clip than Western nations, including the U.S., but Premier Wen Jiabao has warned that the pace of growth will be unstable. China is the second-largest oil consumer in the world behind the U.S., and a slowdown in its economy could cut world oil demand.
Continue reading this story on the...