Oil held around $40 a barrel on Thursday after U.S. crude stocks swelled to an 18-month high and investors anticipated more bleak economic data out of the world’s biggest fuel consumer.

The outlook for more huge job losses in the United States darkened the demand prospects there.

A global financial slowdown has cut demand and swollen fuel stocks, knocking more than $100 a barrel off the price of crude since its July 2008 peak of $147.

U.S. crude inventories jumped by 7.2 million barrels to an 18-month high last week, data from the U.S. Energy Information Administration showed, twice what analysts expected and the sixth straight weekly rise.

U.S. light crude for March delivery ticked up 2 cents to $40.34 a barrel at 1019 GMT, about $4 below London Brent crude for the same month, which gained 30 cents to trade at $44.45 a barrel.

U.S. crude has been locked between $39 and $49 a barrel for the past two weeks.

“Crude oil markets still seem to be trapped within a trading range, as market anticipation about OPEC cuts — both current and pending — is keeping something of a floor below prices,” MF Global said in a report.

“…The upside is capped by lingering concerns over the macro situation.”

Oil losses have been limited by signals this week from the Organization of the Petroleum Exporting Countries that it may cut oil production further in an attempt to bolster the market.

OPEC, worried that the global economic downturn is reducing oil demand and pressuring prices, has promised to reduce oil production by a total of 4.2 million barrels per day (bpd) from levels seen in September.

LONDON, Feb 5 (Reuters)

Crude has hit a new all-time high of $112.21… corn rose to a record $6.16… and gasoline prices across the US hit another all time high.

In Virginia, the pump price of gasoline averaged $3.29 per gallon. The Americans might not like the rising price of gas, but frankly that’s tough: I do. It’s going to make us money.

I welcome high gasoline prices and their impact on crude price and reckon this trend has just started. Indeed, many analysts have been forecasting gas will hit $4 this summer for a while now: but the first prediction of $5 diesel hit the wires overnight too.

It wasn’t the fall in US gasoline stockpiles that was a surprise (especially not to us), it was the crude inventory figures that provided the real shock… but both were bullish for oil.

US crude oil stockpiles decreased by 3.148m barrels in the week ending 4 April. The consensus estimate of analysts was for a 2.5m increase. Gasoline inventories were expected to decline by 2.5m barrels but plunged by 3.442m. Distillate inventories declined 3.693m against expectations for a 1.5m slide.

All this is good news for the oil price because of the 3-2-1 rule… $120 a barrel here we come.

Continues below…

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Gold prices are likely to soar above $1,100 an ounce this year, after bottoming out in the high $800s, according to metals consultancy GFMS.

The group, which provides data to the World Gold Council, said that the factors supporting prices over the last few months would remain in place and investors would continue to look at bullion for strong returns.

It argued that “current knowns” could translate into prices pushing up over $1,100, but perhaps a few “future unknowns” might be required for levels over $1,200 or more.

Jeez, they sound like Donald Rumsfeld.

However, I fully concur with what GFMS are saying, which is something I have never really been able to say about the US’s 21st Secretary of Defense.

Regards,

Garry White

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Crude surged after the Energy Information Administration came in with some inventory surprises.

In its weekly stockpile report, the EIA said that crude was down 3.2 million barrels for the week ended April 4. That stunned analysts, whose consensus was for a 2.7 million barrel build.

“The hefty fall in crude oil stockpiles was a major shock for a market which was expecting the opposite,” wrote Martin Slaney, of GFT Global Markets U.K. “As we head into driving season in the U.S. the tumbling inventories data is particularly significant.”

Meanwhile, U.S. gasoline supplies fell 3.4 million barrels, while distillate supplies dropped 3.7 million barrels. Analysts had been anticipating declines of 2.3 million barrels for gasoline and 1.3 million barrels for distillates. Also, refineries operated at 83% of capacity last week, up from the previous week’s 82.4%.