NEW YORK: Oil prices rallied 3 percent Wednesday as US crude oil inventories fell for the first time in seven weeks and the dollar weakened further, fueling investor appetite for riskier assets. The oil rally extended gains for a second day and both Brent and US crude prices were racing back up toward 2011 highs. ICE Brent crude for June delivery rose $2.74 to $124.07 a barrel by 12:10 P.M. EDT (1610 GMT) after surging to an intraday high of $124.23. Brent hit a 32-month high above $127 a barrel on April 11, but concerns about high prices stifling fuel demand had since cut them back. US June crude gained $3.25 to 111.53, just below its session high of $111.66. US crude inventories fell 2.32 million barrels last week, bucking average analyst forecasts in a Reuters poll for a a 1.1 million barrel increase. It was the first drawdown since the week to Feb. 25, The drawdown was prompted by a big drop in imports and a steep climb in refinery utilization as US refineries ended spring season maintenance. Drawdowns in gasoline stocks for the ninth week in a row and and a decline in distillate supplies for a second straight week added to a tightening of petroleum stockpiles in the world's largest oil consumer. “The inventory trend has been very bullish for the last 10 weeks. And this is partly supporting the strength in crude pricdes outside geopolitics,” said Mark Kellstrom, senior analyst at Strategic Energy Research and Capital in Summit, New Jersey. Oil's rise on a weaker dollar was part of a commodities buying binge, with gold setting a record above $1,500 an ounce, as persistent worries about US fiscal health drove investors to seek alternative assets. “Oil is up there with gold as an inflation hedge for investors,” said Mike Zarembski, senior commodities analyst at optionsXpresss in Chicago.
