Oil jumped above $114 and wholesale unleaded gasoline soared to $2.91, after a U.S. Energy Information Administration report indicated that weekly crude oil inventories unexpectedly fell by 2.36 million barrels.

Analysts surveyed by Bloomberg News had expected crude oil inventories to increase by 1.18 million barrels in the past week. Oil inventories declined 2.36 million barrels to 313.7 million last week, the EIA announced.

Oil pops above $114

The unexpected inventory decline sent oil up $1.16 cents to $114.95 per barrel in Wednesday morning trading. The inventory draw also pushed wholesale unleaded gasoline up 5 cents to $2.91 per gallon. Heating oil also surged 3 cents to $3.29 per gallon. Natural gas rose 2 cents to $10.22 per million BTUs.

Meanwhile, refineries operated at 81.4% of capacity last week, the EIA report indicated, down from 83.0% in the week ending April 4, 2008. Last year at this time, refineries operated at 84% of capacity.

Also, weekly gasoline supplies dropped by 5.5 million barrels, while distillate fuels dipped 100,000 barrels, the EIA said.

Another surprising oil draw

Independent energy trader Jim Dietz told BloggingStocks Wednesday the combination of an unexpected draw in oil inventories and the low refinery capacity utilization continues to push oil higher.

"It was another surprising inventory report. We should have building oil inventories now, and the fact that we don't has put the bulls firmly back in charge." Dietz said. "And as I've stated earlier, it doesn't take much to get this market in buy mode, and we're off to the races again. It wouldn't surprise me if we hit $120 in a few days."

Dietz added that supply disruptions in Nigeria and Mexico, as well as more belligerent talk from Iran's President Ahmadinejad toward the United States, also has the oil markets on edge.

"The small safety cushion between oil supply and demand means that any disruption can produce a $2-3 pop in oil, frequently more," Dietz said. "Eventually, for the market to maintain a sustained drop in prices, we're going to have to address international demand, because it doesn't look like supply increases can keep up with it." Dietz added that he is long with oil and unleaded gasoline with monthly trades, and long unleaded gasoline with a daily trade.

Global oil demand for 2008 is projected to be 87.2 million barrels per day, according to the International Energy Agency. Meanwhile, global oil supply for March 2008 totaled 87.3 million barrels per day, due to lower supplies last month from OPEC, the North Sea region, and non-OPEC Africa.

Dietz said American consumers "have done a pretty good job cutting back gasoline consumption" with weekly demand down on a year-over-year basis for better than two months, but it's not enough to offset Asia-based demand growth.

"The market is coming to the realization that Asia oil demand is growing faster than oil producers' ability to meet that demand, and it's the primary factor in oil's price rise over $100," Dietz said. "Until we address that demand issue, we're not likely to see a pullback to $100 anytime soon."