Oil prices hit record, briefly jump past $115 a barrel

NEW YORK -- Crude oil futures made their first foray past $115 Wednesday, propelled to a record by concerns about how much gas will be available during the peak summer months.

Inventories of gas fell by 5.5 million barrels last week, according to the Energy Department's Energy Information Administration, a much bigger decline than forecast by analysts surveyed by Dow Jones Newswires.

Light, sweet crude for May delivery responded by rising as high as $115.07 on the New York Mercantile Exchange, and later settled up $1.14 at a record $114.93 a barrel.

At the pump, meanwhile, gas and diesel prices rose to their own records.

The report said crude inventories fell by 2.3 million barrels last week, compared to the gain analysts expected.

Oil prices were also boosted by the falling dollar, which declined to a new low against the euro on Wednesday. Many investors buy commodities such as oil as a hedge against inflation and a falling greenback. A weaker dollar also makes oil cheaper to investors overseas.

But the market was torn and traded sharply lower at times due to data deeper in the report showing that the country's appetite for increasingly expensive gas is declining.

"Demand for gasoline is terrible," said Phil Flynn, an analyst at Alaron Trading in Chicago. Gas demand has fallen an average of 1% each of the last four weeks compared to the same period last year. "Demand should be rising this time of year."

The EIA report also said inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline. May heating oil futures rose 0.91 cent to settle at $3.283 a gallon.

Demand for gasoline has been falling for months as consumers reacted to a series of price records by driving less. The national average price of a gallon of regular unleaded gas rose 1.3 cents Wednesday to a record $3.399 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. That's 53 cents higher than a year ago, and is expected to keep climbing along with futures prices and as the summer driving season draws near.