Oil price up over petrol demand

Oil prices have risen nearly 9% after the US government reported an unexpected drop in crude stocks and an increase in demand for petrol.

Prices were also supported by a rise in China's manufacturing index. China is the second biggest oil consumer.

US light crude rose by $3.73 to $45.38. Brent crude added $2.42 to $46.12.

US crude stocks fell by 700,000 barrels for the last week of February, while demand for petrol over the past four weeks was up 2.2% from a year ago.

"Overall the [US oil inventory] numbers are very bullish... again, gasoline remains the one bright spot in the market that can really pull the complex higher," said Chris Jarvis at Caprock Risk Management.

"Oil prices won't move higher without some signs that the economic malaise has bottomed out"
Tom Kloza
Oil Price Information Service

"Couple that with the composite of economic news out of China overnight and this is really setting the stage for the energy complex ... to move higher if the equities markets can maintain themselves."

Stock markets around the world have been rising on Wednesday on hopes China will announce an expansion to its economic stimulus plan.

However, Tom Kloza at Oil Price Information Service said that crude inventories had been bloated for months, and "oil prices won't move higher without some signs that the economic malaise has bottomed out".

"It's going to be a shaky year. The fundamentals are still poor," he said.