Oil prices gain as US inventories fall

Oil prices climbed Wednesday after official data showed U.S. crude inventories decreased more than expected last week. Light, sweet crude for August delivery gained 0.48 U.S. dollars to settle at 106.48 dollars a barrel on the New York Mercantile Exchange. Brent for September delivery went up 0.47 dollars to close at 108.61 dollars a barrel. Energy Information Administration said Wednesday U.S. crude inventories shrank 6.9 million barrels to 367 million barrels for the week ending July 12. Analysts expected a drop of 2 million barrels. U.S. oil supplies have lost 27.1 million barrels in the past three weeks. Crude stockpiles decreased to the lowest level since Jan. 18, which traders believed signaled a major pickup of the demand in the world's biggest consumer. Meanwhile, the oil market was digesting a congressional testimony by Federal Reserve Chairman Ben Bernanke. Bernanke reiterated that the central bank may start to moderate the monthly pace of purchases later this year, but emphasized that the asset purchases depend on economic and financial developments. "With unemployment still high and declining only gradually, and with inflation running below the Committee's longer-run objective, a highly accommodative monetary policy will remain appropriate for the foreseeable future," he said. On the economic front, U.S. new residential construction fell unexpectedly in June, the Commerce Department said Wednesday. Privately-owned housing starts in June dropped 9.9 percent to a seasonally adjusted annual rate of 836,000, its lowest level since August last year, it said.