WASHINGTON, March 16 – (Reuters) – As U.S. crude oil prices soared past $56 a barrel to an all-time high on Wednesday, the government said that hedge funds and speculative traders were not to blame for rising crude costs.
The Energy Information Administration said in its weekly review of the oil market that even though inventory levels for U.S. crude and gasoline are at or above their historical average, the growth in oil demand, especially in China and the United States, and limited spare refinery capacity are responsible for current high oil prices.
“The lack of both spare capacity and inventory cushions to cover potential surges in demand or disruptions in supply, in a strong demand environment, is the primary force behind currently high prices,” said the EIA, which is the Energy Department’s analytical arm.
“As such, EIA does not believe that hedge funds and speculator trading in energy are the main reasons why oil prices are higher now than they were a year or two ago,” the agency said.
Crude for April delivery rose $1.41 to settle at $56.46 a barrel on Wednesday, the highest price for the commodity on the New York Mercantile Exchange since it introduced crude oil futures trading in March 1983.
Crude prices soared after the EIA reported that domestic gasoline stocks in the March 11 week fell 2.9 million barrels to 221.4 million barrels — nearly three times the decline forecast by analysts. A year ago, gasoline stocks stood at 202.4 million barrels.
