Oil ends almost 9% higher
Weekly inventory report says crude stocks decreased by 700,000 barrels last week.
NEW YORK (CNNMoney.com) -- Oil prices remained higher Wednesday as a government report that supplies of crude oil fell unexpectedly last week added to indications of improvement in China's economy.
Crude prices for April delivery rose $3.73, almost 9%, to settle at $45.38 a barrel. Oil had traded up $3 just prior to the report's release, supported by better economic news from China.
The main indicator of China's manufacturing sector, its purchasing managers' index, rose in February for the third month in a row.
The gauge climbed as factories restocked, suggesting China could see an earlier economic recovery despite the bleak global environment.
China's announcement "was the shot in the arm that the global economy needed," said James Cordier, president of Liberty Trading Group. "We haven't seen any bullish news in a while, so people put their arms around it."
Crude supply: In its weekly inventory report, the Energy Information Administration said crude stocks decreased by 700,000 barrels in the week ended Feb. 27. Despite the decrease, oil supply is still above the upper limit of the average range for this time of year.
Analysts expected an increase of 2.2 million barrels of crude oil, according to a consensus estimate of industry analysts surveyed by Platts, a global energy information provider.
The troubled global economy has crippled consumer demand for oil, which in turn has caused a glut of crude. Oil prices have plummeted from a record high of $147.27 a barrel last summer.
OPEC: In response to the growing crude stockpiles, the Organization of Petroleum Exporting Countries - whose members produce about 40% of the world's crude - has been pressured to put a floor under prices.
OPEC has already promised to reduce oil output by 4.2 million barrels per day from September production levels. The group will meet March 15 to decide if it will further cut production or wait to see the outcome of the already existing cuts.
Crude prices have held gains and even rallied recently, so further cuts may not be a good course of action in this fragile economy, Cordier said.
"Everyone is trying to turn the global economy around," he said. "Cutting supplies so prices shoot up $10 could be an anchor on that optimism."
Gasoline: Stockpiles of gasoline rose by 200,000 barrels, while analysts predicted a decrease of 600,000 barrels. Gas supply is in the lower half of the average range.
The national average price for a gallon of regular unleaded gasoline was $1.933, unchanged from the previous day, according to motorist group AAA. That ended five consecutive days of increases.
The EIA report also said distillates, used to make heating oil and diesel fuel, were up by 1.7 million barrels. Analysts were looking for a decrease of 1.5 million barrels.
Outlook: Energy prices have hit their lows and are pushing through a resistance level at $45, Cordier said. He expected crude prices "could be pushing $50 a barrel before too long."
Gasoline sees a seasonal increase in March and April, and prices at the pump could jump 20 to 30 cents in just a few weeks, Cordier said.
"The springtime rally will take place over the next eight weeks no matter what," he said. "After that, any possible further gains are based purely on the stock market and overall economy." 
