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Oil reaches new 2 1/2-year high, nears $106 a barrel

March 23, 2011 |  1:17 pm

U.S. crude oil prices hit new 2 1/2-year highs on Wednesday as Western allies kept up attacks on Libyan government forces and as anti-government protests continued in Syria.

Traders said there was little incentive to bid crude prices lower as long as worries about Middle East supply interruptions remained intense.

“The market is still building a loss-of-supply premium into the price,” said Tom Bentz, director of BNP Paribas Commodity Futures in New York.

May oil futures rose 78 cents to $105.75 a barrel, the third straight increase and the highest closing price since September 2008.

The previous recent high was $105.44 on March 7. Oil then pulled back for a few days, then sank to as low as $97.18 a barrel after Japan’s devastating earthquake on March 11, amid expectations of weaker Japanese demand.

But the price has rebounded this week as fighting in Libya has raged.

Yet U.S. crude supplies continue to climb: The Department of Energy said domestic inventories rose 2.1 million barrels to 352.8 million barrels last week, the highest since early December.

Gasoline inventories, however, fell for a fifth straight week, which Bentz said reflected the usual drawdown of winter-grade gas at this time of year as refineries get ready to switch to summer-grade gas.

-- Tom Petruno

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