Oil near 2-year high on cold snap, tighter stocks

The Pak Banker - - Company & Boss News -

LONDON: Oil prices held above $90 a bar­rel, close to their high­est in two years on Thurs­day, af­ter cold weather boosted de­mand and U.S. stock­piles shrank.

Un­usu­ally cold weather in the United States and Europe has helped to spur the lat­est leg of a more than 30 per­cent rally from a year-low struck in May.

U.S. crude for Fe­bru­ary eased four cents to $90.44 a bar­rel by 0949 GMT (4:49 a.m. ET), af­ter set­tling at the high­est level since Oc­to­ber 2008 on Wed­nes­day, just off a ses­sion peak of $90.80. ICE Brent crude traded 15 cents lower at $93.50.

Wed­nes­day's strong set­tle­ment fol­lowed U.S. in­ven­tory data show­ing a big drop in crude stocks, al­though an­a­lysts said there could be an el­e­ment of dis­tor­tion be­cause of a yearend draw down for tax pur­poses.

"The mar­ket is still try­ing to test re­sis­tance at the pre­vi­ous high," said Olivier Jakob of Petro­ma­trix. "In the (U.S. in­ven­tory) re­port per se there was noth­ing apart from a nor­mal sea­sonal draw-down."

Prices could also be ex­ag­ger­ated by thin trade over the end-of-year hol­i­day pe­riod.

Stock­piles in the world's biggest oil user have fallen by 19 mil­lion bar­rels since Novem­ber 26, roughly equiv­a­lent to one day of U.S. fuel con­sump­tion and the biggest three-week drop since 1998.

De­mand has been stoked by sub-nor­mal tem­per­a­tures, which are ex­pected to con­tinue. Fore­caster Ac­cuWeather.com ex­pects tem­per­a­tures in the U.S. North­east, the world's largest heat­ing oil mar­ket, to av­er­age mostly be­low nor­mal for the next week, while U.S. heat­ing oil de­mand was ex­pected to av­er­age 4.6 per­cent above nor­mal this week.

Af­ter a con­trac­tion in de­mand fol­low­ing global eco­nomic re­ces­sion, fuel use has be­gun to re­bound and is ex­pected to con­tinue grow­ing next year tak­ing ab­so­lute oil con­sump­tion to an all-time high, al­though the rate of growth will still be lower than a peak hit in 2004.

The Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries, how­ever, has yet to change its out­put tar­gets, which have of­fi­cially been the same since it an­nounced a record cut in pro­duc­tion in De­cem­ber 2008. Lead­ing ex­porter Saudi Ara­bia has said $70-$80 is the best range for pro­duc­ers and con­sumers, en­sur­ing enough rev­enue to gen­er­ate in­vest­ment in new sup­ply while avoid­ing the eco­nomic dam­age that could de­stroy de­mand. -PB News

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