Oil Above $91 on Hope for Europe Rate Cut

NEW YORK (AP) -- Oil was headed for its biggest gain in nearly a month as oil supplies rose less than expected in the U.S. and speculation built that the European Central Bank will cut interest rates.

Benchmark oil for June delivery rose $1.94 to $91.12 a barrel in Wednesday afternoon trading on the New York Mercantile Exchange.

Oil rose as expectations mounted among investors for a rate cut next week from the ECB following another weak business survey in Germany, Europe's biggest economy. The gains grew after the U.S. Energy Department said crude oil supplies rose by 900,000 barrels, or 0.2 percent, to 388.6 million barrels last week. Analysts expected an increase of 1.4 million barrels.

A big decline in gasoline supplies was also positive for oil prices, indicating that demand picked up somewhat, although it was still down 1.7 percent over the four weeks ended April 19.

At the pump, the national average for a gallon of gasoline held steady at $3.52. That's 33 cents cheaper than a year ago.

Brent crude, which is used to price oil used by many U.S. refiners, rose $1.28 to $101.59 a barrel on the ICE futures exchange in London.

In other energy futures trading on the Nymex:

  • Gasoline rose 2 cents to $2.74 per gallon.
  • Heating oil added 3 cents to $2.83 a gallon.
  • Natural gas fell 7 cents to $4.17 per 1,000 cubic feet.

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