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NEW YORK -- Crude oil prices surged above $40 a barrel Thursday for the first time in more than a month after the Department of Homeland Security signaled terrorists were scheming to disrupt U.S. elections, reported the Associated Press.
The rally reinforced the market's pattern of buying whenever terrorism worries surface, despite government data showing across-the-board builds in petroleum inventories last week.
"Credible reporting now indicates that al-Qaida is moving forward with its plans to carry out a large-scale attack in the United States in an effort to disrupt our democratic process," Homeland Security Secretary Tom Ridge said Thursday.
August crude futures jumped $1.25, or 3 percent, to settle at $40.33 per barrel on the New York Mercantile Exchange. The rally was fed by a technical rise earlier as prices neared the $40 benchmark, as well as a slimmer-than-expected rise in U.S. commercial oil inventories and the highest gasoline demand in four weeks.
Crude and products prices initially fell on a larger-than-anticipated rise in distillate stocks and an unexpected increase in gasoline stocks last week, as reported by the federal Energy Information Administration, but retraced shortly after. Crude inventories rose only slightly on an uptick in refinery utilization, despite imports holding above 10 million barrels per day.