Oil prices rise as supplies drop

Oil prices touched new highs near $105 a barrel today as the US unveiled a surprise drop in supplies.

With producers cartel Opec also vowing yesterday to keep production steady, the price of light, sweet crude for April delivery touched $104.8 in Asian trading.

It later fell back to $104.32 , still above yesterday’s previous record high of just under the $104 mark.

The US Energy Department reported that oil stocks fell $3.1m barrels last week, defying most analyst predictions of a rise for the eighth time in a row.

Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said: “The primary factor causing the surge in oil prices is the surprising drawdown in crude inventories, which caused traders to really react quite dramatically.”

Today’s spike on the New York Mercantile Exchange follows a series of new highs in recent weeks as US recession fears prompted investors to shift funds into oil instead of other investments such as currencies and shares.

Opec, which has been meeting in Vienna this week, has been urged to boost production to help alleviate the prices.