Oil prices steady after fresh highs

The benchmark contract jumped 2.37 dollars to close at 110.87 on Wednesday. It had earlier crossed 112 dollars for the first time, touching an intraday high of 112.21 during floor trading at the New York Mercantile Exchange. Â

Brent North Sea crude for May was a penny higher 108.48 dollars a barrel.

In London on Wednesday, Brent ventured into uncharted territory above 109 dollars, striking an intraday record of 109.50 before settling 2.13 dollars higher at 108.47.

Crude prices soared after the US Department of Energy (DoE) on Wednesday reported that energy stockpiles in the United States had dropped across the board during the week ending April 4. Crude oil stockpiles slumped by 3.2 million barrels and gasoline inventories shed 3.4 million barrels, the DoE said. Both falls were higher than analyst forecasts.

The substantial inventory and crude oil draws and the weak dollar has pushed prices to a new high," said Tony Nunan of Mitsubishi Corps international petroleum business in Tokyo. "It was a rather bullish inventories report." Nunan said oil prices are likely to shoot higher in the short term. "Prices could reach 120 dollars. Maybe tomorrow, maybe next week," he said.

Traders are particularly focused on gasoline supplies ahead of the peak demand US holiday driving season which starts next month.

The DoE on Tuesday said it sees US gasoline consumption for the coming season declining for the first time in two decades as Americans curb driving due to sky-high prices at the pump.

Dollar weakness also lent support to commodities. The dollar skidded after the International Monetary Fund slashed growth forecasts for the world economy on worries that a credit crisis will deepen.

The euro continued higher at 1.5852 dollars in morning trade, up from 1.5827 late Wednesday.