Oil ends higher on inventory, Fed statement

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NEW YORK (CNNMoney.com) -- Oil prices rose Wednesday after a Federal Reserve left interest rates unchanged, and a government report said supplies of gasoline fell unexpectedly.

The central bank's two-day policy meeting ended Wednesday, and the Federal Open Market Committee held interest rates at historic levels near zero. The FOMC said outlook had improved over the last six weeks, but the economy was still likely to remain weak for a while.

Oil prices settled higher Wednesday, up $1.05, or 2.1%, to $50.97 a barrel. Prices reached a high of $51.42 and a low of $49.12 earlier in the session.

In its weekly inventory report released earlier in the day, the Energy Information Administration said stockpiles of gasoline fell by 4.1 million barrels in the week ended April 24.

Analysts were looking for an increase of 900,000 barrels, according to a consensus estimate compiled by Platts, an energy information provider.

The EIA report also said oil supplies rose by 4.1 million barrels, while analysts were expecting an increase of 1.8 million barrels.

The price of oil is far off its record high of $147.27 a barrel in July. Consumers have scaled back their use of energy amid uncertainty about when the recession will ease. That in turn has caused a glut in supply.

As of last Wednesday, U.S. crude supplies were at a 31-month high of 1.074 billion barrels, according to Platts. The high supply has kept the price of crude hovering around the $50-a-barrel mark in recent months.

That's too low, according to the secretary general of the Organization of Petroleum Exporting Countries, whose members produce 40% of the world's crude.

Earlier this week, Abdalla Salem al-Badri said $50 per barrel is too low for producers to invest in production. He said non-member countries, including Russia, should be cutting output to help put a floor under prices.

Gasoline prices: The national average price for a gallon of regular unleaded gasoline snapped four straight days of decline, rising to $2.05 from the previous day's $2.048, according to survey results released Wednesday by motorist group AAA.

The EIA report also said distillates, which are used to make heating oil and diesel fuel, rose by 1.8 million barrels. Analysts expected an increase of 1.3 million barrels.