(Recasts, updates prices)
By Rebekah Kebede
NEW YORK, March 26 (Reuters) - Oil jumped above $105 a
barrel on Wednesday, after a U.S. government report showed
larger-than-expected drops in fuel stocks and declining fuel
production in the world's top oil consumer.
U.S. crude rose $3.87 to $105.09 a barrel by 1726 GMT,
extending a 36-cent gain on Tuesday. It has fallen from a
record high of $111.80 reached on March 17. London Brent added
$2.89 at $103.49.
"Today's numbers are a nice bullish surprise and come on a
day when the other commodities are picking up as well," said
Mike Zarembski, analyst at optionsXpress in Chicago.
Gasoline inventories fell by 3.3 million barrels as U.S.
refiners slowed their production to the lowest levels seen
since October 2005, when several refineries were knocked
offline by hurricanes Katrina and Rita, U.S. Energy Information
Administration data showed.
The drop in gasoline stocks was more than triple the
800,000-barrel decline expected. Distillates dropped 2.2
million barrels, also more than forecast.
Crude oil inventories also bucked expectations. Stocks were
expected to rise by 1.7 million barrels last week, but were
unchanged.
"Lower-than-expected imports for crude, coupled with a
major drop-off in refinery runs, driven by weak crack spreads
and maintenance, were the catalyst for lower builds for crude
and a much bigger-than-expected drop in gasoline inventories,"
said Chris Jarvis, senior analyst at Caprock Risk Management in
Hampton Falls, New Hampshire.
Earlier on Wednesday, oil rose as a weakening U.S. dollar
prompted some investors to shift money back into commodities
and a 24-hour strike disrupted operations at French ports.
The dollar slid after data showed that new orders for
long-lasting U.S.-made manufactured goods unexpectedly fell 1.7
percent during February, supporting oil and other commodities.
Gold, which like oil is used by investors as a hedge
against inflation, hit a one-week high and industrial metals
such as copper also gained.
French port and dock workers started the strike at 0500 GMT
at French state-owned ports to protest against government plans
to privatize the loading activities of seven out of nine of the
public ports.
The strike gave a lift to gas oil futures, the benchmark
for diesel and heating oil in Europe, traders said. Gas oil was
up 4 percent at $945.75 a tonne.
Analysts said a workers' strike in Gabon that had halted
60,000 barrels of daily output from a Shell subsidiary in the
West African nation also encouraged oil's gains.
There was also a possibility that Iraq's oil output could
be affected by violence in the country's south.
Oil production and exports from the southern oilfields
could be disrupted in three days if workers cannot reach their
offices due to fighting in Basra, a Southern Oil Company
official said.
(Additional reporting by Alex Lawler, Fayen Wong, and
Chikafumi Hodo; Editing by Christian Wiessner)
