Oil jumps to 5-month high

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NEW YORK (CNNMoney.com) -- Oil prices settled Wednesday at the highest price in almost five months after a weekly inventory report said supplies increased much less than expected.

The Energy Information Administration said stockpiles of gasoline increased by 600,000 barrels in the week ended May 1.

Analysts expected an increase of 2.2 million barrels, according to a consensus estimate compiled by Platts, an energy information provider.

Light, sweet crude rose $2.50, or more than 4.6%, to settle at $56.34 Wednesday.

That's the highest settlement price since November 14, 2008, when crude ended at $57.94 a barrel.

Despite the smaller-than-expected increase, crude supplies are at their highest level since 1990, the EIA report said.

Oil prices have averaged about $50 a barrel in recent weeks, down nearly $100 from last summer's all-time high, as concerns about weak demand and growing inventory levels have weighed on prices.

Job market reports: Oil prices rose more than 3% earlier in the session after two reports on the job market raised hopes the economy may be stabilizing.

Automatic Data Processing, a payroll processing firm, said private-sector employment decreased by 491,000 in April, a 31% improvement from the revised 708,000 drop in March. Economists had expected a loss of 643,000 jobs.

Separately, outplacement firm Challenger, Gray & Christmas Inc. reported that the number of announced layoffs fell for the third consecutive month in April, dropping 12% to 132,590. (Full story)

The jobs data helped fuel speculation that the worst of the economic decline is over. It came after a series of unexpectedly strong readings on housing, manufacturing and consumer spending.

Stocks jumped as investors welcomed the employment reports. The Dow Jones industrial average (INDU) gained 76 points, or 0.9%, with under 2 hours left in the session.

Oil prices have tended to rise and fall with the stock market in recent sessions. Many oil traders consider stocks a leading economic indicator and a gauge of future energy demand.

Gasoline prices: Gasoline inventories fell by 200,000 barrels, while analysts expected an increase of 750,000 barrels.

The national average price for a gallon of regular unleaded gasoline rose 3.1 cents to $2.110 from the previous day's $2.079, 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 2.4 million barrels. Analysts expected an increase of 690,000 barrels.