NEW YORK (CNNMoney.com) -- Oil prices settled at a record high for the third day in a row on Wednesday. Prices spiked to a record $115.07 a barrel in midday trading, after a government report showed an unexpected crude supply drop.

U.S. light sweet crude for May delivery settled at $114.93 a barrel on the New York Mercantile Exchange.

In the short term, momentum could push crude prices higher still, according to Brian Hicks, co-manager of the Global Resources Fund at U.S. Global Investors.

However, Hicks says, "at some point, seasonal factors will come into play and we will see a pullback in the second quarter." There is lower demand for crude in the second quarter because consumers are in between the winter heating months and the summer driving months.

Crude began the year at just under $96 a barrel, which means the price has soared by nearly 20% already this year.

In its weekly inventory report, the Energy Information Administration said crude stocks fell by 2.3 million barrels in the week ended April 11.

Analysts had been expecting an increase of 1.7 million barrels after last week's unexpected drop, according to a Dow Jones poll.

Refining gasoline

Oil's above-$100 run has been attributed by many economists to the decline in value of the dollar and poorly performing stock markets. Investors buy commodities such as crude oil and gold to preserve the value of their assets.

The dollar sank to a new low versus the 15-nation euro Wednesday as a government report showed the number of new residential construction projects fell to its lowest level in 17-years

Refineries only operated at 81.4% capacity, EIA said, down from a normal rate of around 90% this time of year. That led one analyst to blame the brief oil retreat on slowing demand for crude.

"Why do we need crude supplies?" said Phil Flynn, senior market analyst with Alaron Trading in Chicago. "People are starting to look at these [inventory] numbers in a different way."

Refineries are using less crude because, with oil prices at record highs, it now costs more to make gasoline.

"Prices of gasoline haven't gone up in sync with crude oil," said Mark Waggoner, president of Excel Futures in California.

With refineries operating at low rates, gasoline production last week fell.

The EIA said gasoline supplies fell by 5.5 million barrels. Analysts had only expected a drop of 1.7 million barrels.

Oil prices have risen about 77% over the last year, and have set new record highs over the last few months.

Slowing demand

Gasoline prices have also risen along with crude, although not as fast. According to AAA gasoline prices hit a new record of $3.399, up one and three tenths of a cent from the previous day's price of $3.386.

The high prices have crimped demand for gas. EIA said gasoline demand rose 0.8% over the last four weeks.

"Usually you would expect [demand] growth of 1.4% to 2%," said Flynn. "What we're seeing is price-related demand destruction."

Refineries have greater incentive to produce distillates, a vital component of diesel fuel, since the price of diesel at the pump has been rising much faster than gasoline.

Distillate supplies rose by 100,000 barrels, according to the EIA. Analysts expected a decline of 1.5 million barrels.

Catherine Clifford, staff writer at CNNMoney.com, contributed to this report.