World oil prices surged again on Thursday, building on the previous day's gains after a sharp fall in US fuel inventories and galloping gasoline consumption stoked fears of a summer supply shortfall.
US benchmark West Texas Intermediate crude futures settled at US$37.14 a barrel, up 99 cents, or 2.7 percent at the New York Mercantile Exchange.
In London, benchmark Brent crude futures settled 89 cents higher at US$33.34, also a 2.7 percent rise.
Both markets gained more than a US$1 on Wednesday after US official data showed a 2.1-million-barrel fall in crude inventories and an 800,000-barrel dip in gasoline stocks at a time when inventories should be rising before the summer driving season.
The rally helped recoup losses from last week, when it appeared stocks were finally building steadily despite OPEC's decision to go ahead with output cuts starting April 1.
Prices have surged about 8 percent in the last three days.
"The stocks turned expectations on their heads, flipping market sentiment from slightly bearish to bullish in nanoseconds," Societe Generale wrote in a note. "The key is the near-feverish demand for gasoline and diesel."
The fall puts US gasoline stocks at one of the lowest levels in 30 years for this time of the year.
"The gasoline market is now on the precipice of a serious supply problem," said Barclays Capital in a report.
Analysts were also stunned by the 4.5-million-barrel drop in distillate stocks -- the biggest fall for this time of the year in over 20 years, signaling strong diesel demand from the trucking sector on the back of a recovering US economy.
Strong demand growth -- over a month before the US driving season kicks off -- has revived fears of a supply crunch during peak demand summer, when gasoline consumption is expected to hit a record 9.32 million barrels per day, up 2.2 percent from last year.
Barclays said that even if the US government agreed to waive requirements for cleaner-burning fuels, supply was unlikely to keep pace with demand. A top US energy official also said the waivers would have little bearing on supply or prices.
"In the short run, a waiver this summer would not have much of an impact, because the refineries and distributors of gasoline have already made their configurations" to make summer motor fuel, said Guy Caruso, administrator for the US Energy Information Administration (EIA).
Prices on European gasoline markets, a key supply source for the US, have leaped to four-year highs. The EIA warned on Thursday that US consumers could expect to pay a record average US$1.76 a gallon for gasoline this summer, 20 cents above last year.
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