NEW YORK (CNNMoney.com) -- Oil prices ended higher Wednesday after a government report said supplies of crude oil and gasoline fell more than expected.

U.S. light crude for August delivery gained 27 cents to settle at $72.19 a barrel on the New York Mercantile Exchange. Trade was volatile throughout the day, rising nearly a dollar following the report's release then spending part of the afternoon in negative territory.

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In its weekly inventory report, the Energy Information Administration said crude supplies fell by 3.4 million barrels. Analysts were looking for a drop of only 800,000 barrels, according to Reuters.

EIA said gasoline stocks fell by 1 million barrels. Distillates, which are used to make heating oil and diesel fuel, rose by 1.8 million barrels.

Analysts were looking for a 100,000 barrel build in gasoline supplies and a 1.2 million barrel increase in distillates.

Despite the drop in crude and gasoline supplies this week, the EIA said crude stocks still remain well above average and gasoline supplies are about normal.

Preventing a further slide Wednesday is the closure of a key shipping channel in Louisiana, limiting output at three refineries before the July 4 Independence Day holiday when travel is expected to be busier than ever.

The Calcasieu Ship Channel was shut on June 21 because of an oil spill from a Citgo terminal facility.

Refineries in the area have depleted their crude stocks on hand and are now negotiating with the federal government to get oil from the Strategic Petroleum Reserve until the channel reopens.

The Coast Guard said Wednesday about nine miles of the channel had reopened and about 11 miles remained closed.

Oil has traded between about $69 and $72 a barrel for more than a month as the market balances real and threatened supply disruptions and rising global demand against inflation fears and brimming U.S. fuel stocks.

Federal Reserve policy-makers, gathering on Wednesday and Thursday, are expected to raise interest rates and signal that further increases may be needed to keep inflation in check.

Adjusted for inflation, oil is at its most costly since 1980, the year after the Iranian Revolution, and is holding near the $75.35 record high hit in April after climbing from $20 at the start of 2002.

From staff and wire reports

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