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Oil surges amid signs refiners are revving up

NEW YORK -- Oil prices surged more than $2 a barrel yesterday, a day after the government reported more robust refinery activity for the first time in weeks -- a sign that refiners have begun to ramp up production ahead of the summer driving season.

Traders also appeared to interpret a decision by the Federal Reserve to leave its benchmark interest rate unchanged as positive for the market.

A barrel of light, sweet crude for May delivery climbed $2.08 to settle at $61.69 on the New York Mercantile Exchange -- its highest closing price since settling at $61.64 on March 8.

The government's inventory report released Wednesday indicated refineries are starting to emerge from a seasonal maintenance period after weeks of declining utilization, and will soon demand more crude oil. The Energy Information Administration said refineries operated at 86.3 percent capacity last week, up 0.7 percent from the prior week.

The EIA reported a larger-than-expected, 3.4 million-barrel decline in gasoline inventories for the week ended March 16, while distillate stocks also fell more than analysts had forecast.

Nymex gasoline futures rose 3.5 cents to settle at $1.9205 a gallon.