Oil jumps to $42.41 a barrel

The drop in gasoline inventories came in data from the US Energy Information Administration that also showed a 1.7 per cent rise in demand for the fuel over the four weeks ending Feb. 20.

“The big draw is in gasoline. Demand is up and refinery runs are lower than expected. Demand is coming back,” said Tom Bentz,an analyst at BNP Paribas Commodity Futures in New York.

US gasoline inventories fell 3.4 million barrels last week,according to the EIA,while crude inventories rose by 700,000 barrels.

The rise in oil prices came despite a drop in equities markets,with European shares hitting a new six-year low. US stocks fell after US President Barack Obama’s first address to Congress shed little new light on how he plans to stabilize the economy and shore up banks.

Data showing sales of previously owned US homes plunged in January and prices hit a six-year low also weighed on shares.

Further support for oil prices came from reports this week of high compliance by members of the Organization of Petroleum Exporting Countries with deep production cuts agreed last year to stem the slide in oil prices.

Venezuelan Finance Minister Ali Rodriguez,a former president of OPEC,said on Wednesday the OPEC nation expected to propose new output cuts when the group next meets in March.