Oil surges to near $103 as US stockpiles fall

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Libya, Iraq and Egypt oil prices rise
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Oil surges to near $103 as US stockpiles fall
TRIPOLI, LIBYA - JULY 16: Remains of a burnt airplane is seen at the Tripoli international airport in Tripoli, Libya on July 16, 2014. Tripoli international airport came under rocket fire Wednesday for a fourth straight day and attacks aimed at ousting anti-Islamist fighters who control the facility. Islamist militias have since Sunday unleashed dozens of rockets at Tripoli airport, damaging around a dozen planes and closing down Libya's main air link with the outside world. (Photo by Hazem Turkia/Anadolu Agency/Getty Images)
The wreckage of a truck and an airplane are seen at Tripoli international airport in the Libyan capital on July 14, 2014 following fighting between rival armed groups the previous day. Islamist militias attacked the rival Zintan group that controls Libya's international airport in Tripoli yesterday, triggering fierce clashes that halted flights, officials said. AFP PHOTO/MAHMUD TURKIA (Photo credit should read MAHMUD TURKIA/AFP/Getty Images)
TRIPOLI, LIBYA - JULY 12: Group of people gather at Algeria Square, to protest ongoing Israeli air strikes on the Gaza strip in Tripoli, Libya on July 12, 2014. (Photo by Hazem Turkia/Anadolu Agency/Getty Images)
Egyptian Foreign Minister Sameh Shukri listens to a question during an interview with the Associated Press,Thursday, July 17, 2014 in Cairo, Egypt. Egypt’s foreign minister on Thursday that his country’s proposal for a cease-fire between Israel and the Palestinian militant group Hamas is gaining momentum, calling it the only viable way to stop an “intolerable humanitarian situation” in Gaza.(AP Photo/Maya Alleruzzo)
Iraqi civilians gather the morning after a car bombing that killed many people and wounded tens of others in a crowded outdoor market, in the Shiite neighbourhood known as Sadr City, Baghad Iraq, Wednesday, July 16, 2014. (AP Photo/Karim Kadim)
A destroyed car is moved from the site of a car bomb explosion in Baghdad’s Allawi neighborhood, Iraq, Monday, July 14, 2014. Parked car bombs killed civilians in commercial areas of Baghdad on Monday, as government forces and allied Sunni tribal fighters tried to dislodge militants from a small town north of the capital, officials said. (AP Photo/Hadi Mizban)
Iraqi onlookers gather on July 16, 2014 around a burnt motorcycle at the scene of an explosion that took place the previous night in Sadr City, one of Baghdad's northern Shiite-majority districts. As Iraq's sharply divided parliament elected a speaker on July 15, violence struck Baghdad, with attacks including two car bombs killing at least 27 people in the Iraqi capital. AFP PHOTO/ALI AL-SAADI (Photo credit should read ALI AL-SAADI/AFP/Getty Images)
ARBIL, IRAQ - JULY 17: Iraqi kid drink water at Hazer refugee camp as Antonio Guterres (not seen), United Nations High Commissioner for Refugees visits the camp where Iraqi people take shelter after fleeing Mosul, seized by Islamic State of Iraq and the Levant (ISIL) led militants, on July 17, 2014 in Arbil, Iraq. (Photo by Emrah Yorulmaz/Anadolu Agency/Getty Images)

The price of oil surged to near $103 a barrel Thursday after a U.S. inventories report showed a larger-than-expected drop in crude oil supplies.

By early afternoon in Europe, benchmark U.S. crude for August delivery was up $1.64 at $102.84 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the Nymex contract added $1.24 to close at $101.20.

On Wednesday, the U.S. Energy Information Administration said U.S. crude oil inventories fell by 7.5 million barrels to 375 million barrels in the week of July 11. The fall was bigger than expected and attributed to increased refinery activity. Analysts had forecast a drop of 3 million barrels, according to a survey by Platts, the energy information arm of McGraw Hill Financial.

Last month, supply concerns caused by conflicts in Iraq jacked up the price of oil to above $107 per barrel. But the price drifted lower as Iraqi insurgents failed to advance and oil exports remained unaffected. Libya's comeback to the oil market also pushed down prices, though experts remained cautious.

"The performance of oil prices in the next few weeks is likely to be dictated above all by the development of Libyan oil supply," said a note to clients from analysts at Commerzbank in Frankfurt. "Since it will doubtless take some weeks before the oil terminals are fully operational again, the oil supply from Libya is unlikely to increase noticeably in the short term."

New sanctions announced by Washington against Russia over the conflict in Ukraine were seen giving some support to prices, though their impact wasn't expected to be immediately significant. Energy firms Novatek and Rosneft have been barred from getting long-term loans from U.S. entities.

Brent crude, a benchmark for international oils, was up 87 cents to $108.04 on the ICE Futures exchange in London.

In other Nymex trading:

- Wholesale gasoline was down 0.38 cent to $2.852 a gallon.

- Natural gas dropped 6.4 cents to $4.055 per 1,000 cubic feet.

- Heating oil rose 1.26 cents to $2.882 a gallon.

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