Oil spikes above $102 a barrel as weakening dollar draws investors to commodities

NEW YORK — Crude prices spiked above $102 a barrel for the first time Wednesday but retreated after the government said stockpiles of crude oil and gasoline rose far more than expected last week.

Prices nonetheless remained within range of Tuesday's record close as the dollar tumbled to fresh lows against the euro and U.S. economic worries drove more money into energy futures as a hedge against inflation.

"This is a market that has been trending strongly to the upside, ignoring fundamentals, and focusing on other factors," said Tim Evans, an energy analyst at Citigroup Global Markets.

Light, sweet crude for April delivery fell 12 cents to $100.76 on the New York Mercantile Exchange, after surging as high as $102.08 a barrel in electronic trading earlier. The contract on Tuesday jumped $1.65 to settle at $100.88 a barrel, a record.

"It's not about the gas inventories, it's not about the seasonality," Evans added. "Traders are buying and selling on other theories of valuation. They are not looking at how oil supply compares with oil demand."

Meanwhile, gasoline prices at the pump jumped a penny overnight, rising to an average of $3.152 from $3.142, according to AAA and the Oil Price Information Service. A year ago, drivers were paying an average of just $2.37 for a gallon of gas.

The report by the Energy Department's Energy Information Administration showed U.S. crude oil inventories rose by 3.2 million barrels, or 1 percent, to 308.5 million barrels. Although that number is slightly lower than levels a year ago, it is well ahead of the 2.4 million barrel gain analysts had been expecting, according to a survey by Dow Jones Newswires.

It was the seventh straight week the report showed a rise in crude inventories, suggesting the U.S. at least has more than enough oil to meet demand. Data showed gasoline inventories also jumped more than expected — by 2.3 million barrels to 232.6 million barrels. Analysts had expected a more modest rise of 400,000 barrels. Refinery activity also increased much more than expected.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill., said the report ought to send a bearish signal to the market. But, he added, traders have found other reasons to push prices up in the face of previous bearish reports.

"The initial response to the downside from this report could be easily reversed by day's end," he said.