Oil Hits 22-Month High; Gold Inches Up

The new bull market on Wall Street? Try the commodity pits.

Crude oil surged Wednesday to a 22-month high after an industry report showed U.S. inventories fell for a third straight week and a Texas oil terminal fire shut a pipeline that moves more than 3% of U.S. supplies.

Oil, which has been soaring since late winter as demand has zoomed and producers have slashed output, gained 22 cents to $21.52 a barrel for the nearest-term futures contract on the New York Mercantile Exchange.

That’s the highest closing price since Oct. 10, 1997.

U.S. inventories fell 1% last week to a seven-month low, as imports dropped 5%, the American Petroleum Institute said after trading Tuesday.

Supplies could tighten further after an explosion at a Chevron Corp. pipeline terminal halted movement of 210,000 barrels a day of domestic oil production.

“I’m only surprised that the market is not even higher on both the explosion and the inventory numbers,” said Michael Fitzpatrick, a trader at Fimat USA Inc.

The fire at the Chevron oil terminal near Wortham, Texas, south of Dallas, was brought under control and was expected to burn out quickly. But Chevron couldn’t say when the pipeline would reopen.

In other markets, gold and silver continued to move up Wednesday, with gold adding $1.50 to $260.20 an ounce, the highest since July 2.

But grain prices took a breather from their recent rebound.

Corn and soybeans fell for the first time in four days as rain across the Corn Belt brought crops much-needed moisture.

Storms moving from Nebraska through Iowa and Missouri into the eastern states are bringing more rain than expected and will probably last through the weekend, forecasters said.

Soybean prices had gained 17% and corn 22% in the past month as dry weather threatened to damage crops and reduce yields.

“Corn and soybeans are taking their lead today from the weather after forecasters said there will be a lot more rain during the next few days,” said Victor Lespinasse, a trader at A.G. Edwards & Sons in Chicago.

Corn futures for December delivery fell 5.5 cents to $2.35 a bushel on the Chicago Board of Trade. Soybean futures for November delivery shed 7.25 cents to $4.86 a bushel.

Still a report today from the U.S. Department of Agriculture will probably show smaller corn and soybean crops than forecast in July, reflecting damage from a period of prolonged hot, dry weather.