Oil prices up at US$113 after US inventory report

NEW YORK, August 13, 2008 (AFP) – Oil prices rallied Wednesday after a weekly US government snapshot showed a surprisingly sharp drop in gasoline stockpiles amid the peak demand season.

Oil prices bounced back strongly after sliding to four-month lows Tuesday after Russia announced the end of military operations in Georgia and as the International Energy Agency forecast a steep drop in oil demand in advanced countries.

New York’s main oil futures contract, light sweet crude for September delivery, won back 2.99 dollars to close higher at 116.00 dollars a barrel.

In London, Brent North Sea crude for September gained 2.32 dollars to settle at 113.47 dollars.

The latest price action came after the US Department of Energy reported that US reserves of gasoline, or petrol, had fallen by 6.4 million barrels in the week ended August 8.

Analysts had predicted a drop of just 2.0 million barrels.

Gasoline inventories are closely watched at this time of year as American motorists hit the highways for their summer vacations, typically pushing up demand for the refined fuel.

Some analysts said nonetheless that oil prices will likely continue dropping as it appears