Oil hits new high on reserves dip

US motorists are getting use to higher pump prices

Oil prices hit all-time highs on Wednesday after data showed a drop in US petrol and heating stock reserves.

In New York, US light crude rose $1.41 to $56.46 a barrel, while in London the price of Brent crude reached $54.80 a barrel, up 95 cents on the day.

The rise came after Opec agreed to lift production ceilings by an extra 500,000 barrels a day to help ease high prices.

Analysts said the move may have little impact amid soaring demand and concerns over potential supply disruptions.

Opec member states are already pumping above their new daily output ceiling of 27.5 million barrels.

Statements from China that it was considering using foreign exchange reserves to build petroleum stocks also weighed on traders' sentiment.

Markets 'preoccupied'

The formal New York settlement price on Wednesday for crude oil for April delivery beat a previous record high of $55.17 a barrel set last October. The previous high for Brent crude of $54.30 was set on 9 March.

I think the market is preoccupied with projections of rising demand growth Marshall Steeves, Refco Brent crude oil price US light crude oil price

While oil prices are 50% higher than a year ago, they would need to rise above $90 a barrel in order to surpass the all-time 1980 record in inflation-adjusted terms.

The US government's Energy Information Administration said crude stocks had risen for a fifth week in a row.

But the markets were unsettled by figures showing larger-than-forecast drops in levels of petrol and distillate fuels, which include heating oil and diesel.

The International Energy Agency has forecast demand for crude oil will grow even faster than expected this year as demand in the US and China remains strong.

"I think the market is preoccupied with projections of rising demand growth this year and the possibility that demand growth will rise at a higher pace than supply growth," Marshall Steeves, analysts at Refco told Reuters.