Brent crude and WTI: Oil set to clock first weekly gain this year on cold weather

Jessica Morris
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Oil fell to its lowest level since 2003 last week (Source: Getty)

Oil prices are set to clock their first weekly gain this year, as freezing weather and snowstorms in parts of the US and Europe boosts demand for heating oil.

Brent crude, the global benchmark, jumped seven per cent to $31.30 per barrel, while West Texas Intermediate crude, the US benchmark, increased 6.26 per cent to $31.38.

"There is no fundamental justification whatsoever to think that the current downtrend is changing," Tamas Varga, an analyst at PVM Oil Associates, said.

"All one has to do is look at this month's report from the IEA to see that, especially the first half of this year, the market is going to be oversupplied."

Read more: Will oil prices fall below zero? It's fear driving markets lower

Earlier this week the IEA warned that the oil market would come under "enormous strain" this year as supply continues to outpace demand.

A global supply glut has been compounded by oil producers' refusal to cut production to defend their market share at a time when global demand is waning.

Iran's return to the oil market, following the removal of Western sanctions, helped Brent touch its lowest level since 2003 this week. While Iran expects to raise output by 500,000 bpd, the IEA predicts a more modest increase of 300,000 bpd.

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