NEW YORK (Dow Jones)--Crude oil futures prices settled at their highest level this month after U.S. crude oil inventories dropped more than expected.

Light, sweet crude oil for October delivery on the New York Mercantile Exchange settled up $1.58 a barrel, or 2.2%, at $72.51 a barrel, the highest level since Aug. 28.

U.S. crude oil stocks fell 4.7 million barrels in the week ended Sept. 11, the Energy Information Administration said. That was nearly double the level expected by analysts surveyed by Dow Jones Newswires, and it contradicted data released Tuesday by the American Petroleum Institute, which showed a modest rise in crude stocks in the week.

About 80% of the drawdown in the week occurred at the Cushing, Okla., storage hub, which is the delivery point for the Nymex crude futures contract. Cushing inventories dropped to their lowest level since Dec. 12, aided in part by a 200,000 barrels a day decline in imports.

Analysts said refiners appeared to be trimming inventories ahead of an expected steep drop in crude processing in coming weeks for seasonal maintenance work and in the face of weak margins.

Crude's assent was helped by moves through key chart points near $72 a barrel and by weakness in the dollar, as the euro climbed to a new 12-month record. At times of dollar weakness, investors often move to commodities as a safe harbor, and the weaker dollar makes crude oil futures relatively cheaper for overseas investors.

Tom Bentz, a broker and analyst at BNP Paribas in New York, said crude futures may be ready to again test the $75 a barrel level, which was hit intraday on Aug. 25 and was the highest level since October.

Traders said the crude oil data are tempered by increases in products stocks, which could weigh on further rallies. The EIA said already bloated distillate stocks (diesel/heating oil) rose by 2.2 million barrels and stand at their highest level since January 1983. Gasoline stocks rose 500,000 barrels and are "near the upper limit" of their five-year average for this time of year, EIA said.

Implied oil demand in the week dropped by 2.1%, or 418,000 barrels a day, from a week earlier, to 19.1 million barrels a day, the weakest level since Aug. 7, the EIA data show.

"There is still plenty of supply out there," Bentz said. "But the market is not looking at the big picture."

October delivery heating oil futures settled up 4.57 cents a gallon, or 2.6%, at $182.58 a gallon, the highest level since Aug. 28. The rise was the biggest since Sept. 8.

October delivery RBOB reformulated gasoline settled 3.3%, or 5.91 cents, higher at $1.8483 a gallon, the highest level since Aug. 31. The rise was the biggest since July 30.


More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:

Nymex Light Crude Oil Close

Nymex Harbor RBOB Gasoline Close

Nymex Heating Oil Close

ICE Brent Crude Oil Close

ICE Gas Oil Close


-By David Bird, Dow Jones Newswires, 1-212-416-2141; david.bird@dowjones.com