Oil inches closer to record high

Crude rises above $78 a barrel, supported by forecasts for another weekly decline of supplies in the United States, the world’s top consumer.

U.S. oil jumped above $78 a barrel Wednesday, rising toward its all-time high, on forecasts for another weekly decline in crude stocks in top consumer the United States and a recovery in world share markets.

U.S. crude was up $1.22 at $78.05 a barrel on the New York Mercantile Exchange after climbing as high as $78.24. London Brent crude was up $1.14 at $76.88.

U.S. oil hit a record high of $78.40 in July 2006.

Stocks around the world bounced back sharply on Tuesday as volatile credit markets stabilized.

OPEC, which pumps more than a third of the world’s crude oil, agreed at two meetings late in 2006 to cut supplies by a total 1.7 million barrels per day. Ministers meet again Sept. 11. Some have said they see no reason to change policy.

“The market held cited support at $76, and we still look for demand on dips to this level,” Barclays Capital technical analysts said. “The focus is still higher.”

The United States will announce weekly fuel inventory data on Wednesday. Analysts expect a further 1.1 million-barrel decline in crude stocks, a preliminary Reuters poll found.

Gasoline stocks were expected to be up 700,000 barrels, with refinery capacity utilization rising 0.6 percentage point.

This year’s Atlantic hurricane season has so far spared the United States’ oil producing and refining region. The market is keeping a watchful eye on the progress of any gathering storms.

“Atlantic activity is expected to increase during August,” said Jakob of Petromatrix.

“Tropical Depression number three is off the U.S. East Coast and should drift towards Iceland causing no real threat to oil interests. The only oil interest in its path is the Come-By-Chance refinery but no significant strength development is expected of the depression.”