Oil prices closed at a record $94.53 Wednesday after a government report said U.S. oil supplies fell to a two-year low and the Fed lowered U.S. interest rates.

Light, sweet crude for December delivery closed up $4.15, or 4.59 percent, on the New York Mercantile Exchange after hitting $94.74 a barrel earlier, the highest price since trading began in 1983.

Oil stockpiles dropped 3.89 million barrels to 312.7 million barrels last week, the lowest since October 2005, the U.S. Energy Department said. Many analysts had expected a barrel gain of 400,000 to 1.25 million barrels.

The department also said refinery capacity utilization fell a sharp 0.9 percent to 86.2 percent. Analysts had expected a 0.5 percent increase.

Gasoline supplies rose 1.3 million barrels to 195.1 million barrels, while distillate stocks -- which include heating oil, diesel and jet fuel -- grew 800,000 barrels to 135.3 million barrels, the department said.

Separately, the U.S. Federal Reserve cut short-term interest rates a quarter-point to 4.5 percent, increasing oil's appeal as an alternative investment.

December natural gas surged 31 cents, or 3.85 percent, to $8.33 per 1,000 cubic feet.

Heating oil advanced 8.32 cents, or 3.43 percent, to $2.5078 a gallon.

Reformulated-gasoline blendstock for oxygen blending added 8.29 cents, or 3.67 percent, to $2.34 a gallon.

AAA said the average U.S. retail regular unleaded gasoline price was $2.899 a gallon, up 2.4 cents from Tuesday's $2.875 a gallon.