NEW YORK -- Oil prices surged Thursday on fears of hurricane damage and lower-than-expected crude oil and gasoline inventory data released by the government.
"The market is obviously concerned about the storm," said Tom Kloza, director of Oil Price Information Service, adding that the crude stock statistics helped trigger the rally.
On the New York Mercantile Exchange, crude futures rose $1.84 to settle at $44.61 a barrel.
Ed Silliere, vice president of risk management at Energy Merchant LLC in New York, called the market movement "exaggerated," noting that the bullish data led traders to cover short positions - essentially bets that crude prices would fall - and that the storm led to nervous buying.
Hurricane Ivan intensified early Thursday to become a Category 5, the most powerful. It packed sustained winds of 160 mph as it passed north of the Caribbean islands of Aruba, Bonaire and Curacao.
Hurricane-induced buying was intensified by the Department of Energy report that U.S. commercial crude inventories fell by 1.4 million barrels in the past week to 285.7 million barrels.
Even more of a surprise to investors, analysts said, was the drop in total motor gasoline stocks from 206.6 million barrels to 204.1 million.
"The real bullish number was gasoline," Silliere said.
October gasoline rose 4.37 cents to settle at $1.2254 per gallon on the Nymex Thursday.
With Ivan expected to head into the Gulf of Mexico by Sunday or Monday, traders are buying partially on concerns about crude shipment delays and interference with production and refinement.
Concerns about refineries sent heating oil up 6.68 cents to $1.2280 per gallon on the Nymex.
Analysts do not expect oil to continue in its upward trend for long or to reach the highs of last month, unless Ivan incurs significant damage to oil production facilities. Crude hit a record high settlement of $48.70 on Aug. 19.
"I expect a follow-through, then profit-taking tomorrow," Silliere said, adding, "We will know about this bad boy on Monday, no question about it."
Crude supplies should build over the coming weeks, Kloza said, and refineries will soon be entering maintenance season, which typically lowers the demand for crude oil.
"We'll have a tough time staying up at these levels," Kloza said. "But if the hurricane does damage, that's a wild card that no one can predict at this time."
On Thursday, Valero Energy Corp. began start-up operations at its 225,000 barrels-a-day refinery in Aruba, following a full shutdown Wednesday morning ahead of Ivan. Also, loading of oil tankers at Venezuelan ports resumed on Thursday after port authorities had ordered all maritime traffic in Venezuela to be halted Wednesday evening.
On London's International Petroleum Exchange, Brent crude rose $1.83 to settle at $42.22 per barrel.
In other Nymex trading, October natural gas rose 2.7 cents to close at $4.658 per 1,000 cubic feet.