Oil rises on lower supplies, cold weather
Oil rose to US$82 a barrel Tuesday after a jump in stock markets boosted investor confidence and helped extend a four-week rally in crude prices. Falling energy supplies and a cold wave were also contributing factors.
Benchmark crude for February delivery closed up 26 cents at US$81.77 a barrel, the highest settlement price on the New York Mercantile Exchange since October 9, 2008. It climbed as high as US$82.00 a barrel earlier in the trading session.
In London, Brent crude for February delivery rose 47 cents to settle at US$80.59 a barrel on the ICE Futures exchange.
Oil traders often look to stock markets as a measure of overall investor sentiment, and equities rose in the first trading day of 2010 as investors eyed signs of improvement in US and Chinese manufacturing.
Weatherwise, vicious pockets of cold stretched from the Northeast to the South, where farmers in the Florida panhandle tried to save tomato and strawberry crops. Four deaths in Tennessee were blamed on low temperatures.
The frigid blast has squeezed heating oil supplies in some areas in the US during a year when demand had been very weak and refineries have been operating at low levels.
“On the weather front, the US might experience its coldest winter since the 1980s,” said JBC Energy in Vienna. “In Britain, the freezing cold temperatures are also likely to continue, after a record cold December.”
Heating oil futures settled up less than a cent at US$2.1941, well beyond the highest prices of 2009. Gasoline futures closed more than two cents higher at US$2.125, the highest since October 3, 2008.
Huge surpluses have been falling in recent weeks, contributing to prices already driven higher by the falling dollar. When the dollar falls, investors holding stronger currency can essentially buy more dollar-based crude and they have, doubling oil prices last year.
One of the breaks US consumers got in 2009 was cheap energy. It’s too soon to tell if the rising prices right now will stick, though Peter Beutel of Cameron Hanover called sharply higher heating oil prices an “ominous sign for the year ahead.”
In other Nymex trading in February contracts, natural gas futures fell 24.7 cents to settle at US$5.639.
