Oil rose above $82 a barrel on Wednesday, closing in on a record hit the previous day after the U.S. Federal Reserve cut interest rates and raised expectations of still robust energy demand in the world's top consumer.
U.S. light crude rose 71 cents to $82.22 a barrel by 0936 GMT, after gains of 94 cents on Tuesday, when prices hit a fresh record of $82.38. London Brent crude gained 52 cents to trade at $78.11 a barrel.
The Fed slashed rates by a half-percentage point on Tuesday in a bid to shield the U.S. economy from a housing slump and financial turbulence -- sparking a rally across equities and commodities.
"Now the market is going to be searching for $85 a barrel," said Tony Nunan of Mitsubishi Corp in Tokyo.
Oil prices -- up a third since the start of the year -- have risen on hurricane threats and other supply risks, fund flows into energy from poorly performing equity markets and falling U.S. fuel inventories.
U.S. crude oil stocks are forecast to have dropped last week for the fourth straight week, sinking 2 million barrels, said industry analysts polled by Reuters ahead of government data later on Wednesday.
"If we get a big drop in inventories, like three to seven million, then prices could get there ($85) in a hurry," Nunan added.Crude stocks are now at the lowest level in eight months.
Gasoline stocks probably dropped for the seventh week running, given strong demand and lower output after three Texas refineries were shut temporarily due to Hurricane Humberto. Distillate stocks, which include heating oil, were seen rising.
(Reuters)