--Light, sweet crude for April delivery rises 76 cents to $102.59 a barrel
--Overall inventories grow less than expected
--Continued supply reductions at key U.S. delivery point
U.S. oil prices rose Wednesday after weekly U.S. inventory data showed a smaller-than-expected increase in national crude supplies.
Light, sweet crude for April delivery settled up 76 cents, or 0.7%, at $102.59 on the New York Mercantile Exchange. Prices for the global Brent crude contract rose 1 cent to $109.52 a barrel on the ICE Futures Europe exchange.
The amount of crude stored in the U.S. increased by just 68,000 barrels, well below the 800,000-barrel increase analysts projected in a survey by The Wall Street Journal and estimated by an industry trade group, the American Petroleum Institute.
It was the smallest weekly increase since June, suggesting that demand for crude may be stronger than the market expected.
"It was mildly bullish" for prices, said Andy Lebow, a senior vice president of energy derivatives at Jefferies Inc. "It wasn't extraordinarily bullish by any means."
A severe winter across much of the U.S. has boosted demand for crude, which can be refined to produce heating oil to warm homes and businesses, and helped oil prices climb to a four-month high last week.
The U.S. Energy Information Administration reported Wednesday that crude stored in a major hub fell by 1.1 million barrels. Improvements in the nation's oil infrastructure have enabled greater shipments of crude from the hub in Cushing, Okla., to Gulf Coast refineries, where it can be processed and sold to meet overseas demand.
Though nationwide crude stockpiles grew for the sixth week in a row, supplies at Cushing declined for a fourth straight week. The news is bullish for U.S. oil prices, which had been trading at a discount to the global benchmark because of massive supplies at Cushing. As those supplies dwindle, U.S. oil prices have been able to narrow the gap with Brent crude.
The EIA report also said refineries operated at 88% of capacity, suggesting increased commercial demand for crude at a time when analysts were expecting a decline in the rate. This is the time of year when refineries cut back on operations to perform seasonal maintenance. The refining rate was about 1 million barrels a day higher than the five-year average, CIBC World Markets said in a note.
Reformulated gasoline blendstock, or RBOB, for March delivery gained 0.11 cent to settle at $2.7992 a gallon. March diesel rose 2.38 cents, or 0.8%, to $3.1281 a gallon.
