Oil prices surged to a new record level of $112.21 a barrel and the gasoline prices also climbed to a new record as the Energy Department announced a decline in U.S. crude supplies.

The Energy Department announced a 3.1 million-barrel decline in crude-oil stockpiles last week. Analysts polled by Dow Jones had predicted an increase of 2.4 million barrels.

The supply decline sent the crude price up 3.4 percent and gasoline up 2.6 percent.

The pump price is now near the record $3.343 a gallon, the AAA said. All that Adam Sieminski, Deutsche Bank's chief energy economist, could say about the surging prices was that „the supply and demand fundamentals are still important.''

Most traders are expecting further price climbing. Phil Flynn, senior market analyst of Alaron Trading in Chicago, said that if the price passes $111.80, $115 is next.

When the Energy Information Administration issued the report, crude oil was trading at a price slightly above $109, but the news that came in at 10:30 a.m. ET generated a wave of buying, with the contract quickly pushing above $110. Then the short sellers had to buy contracts so they could cut their losses.

"All bets are off right now," said Stephen Schork, publisher of Pennsylvania-based industry newsletter The Schork Report.

Crude oil rose 80 percent over the past year. The increase became the second biggest among 19 commodities on the Reuters/Jefferies CRB Index. The biggest gain was registered by wheat, which rose 100%.