Oil rose more than two per cent to touch two-month highs over $81 a barrel yesterday as cold weather battered the US and other big consumer regions, driving up demand for heating fuel.
Frigid temperatures are expected to drive up US heating demand to 21 per cent above normal, with consumption in the US Northeast, the largest heating oil market, seen up 11 per cent above average levels.
Unusually cold weather in Britain is expected to continue into the second half of January after the coldest December since 1995, said the UK’s Met Office. Colder temperatures in Europe were seen gradually spreading from the northeast to southwest during the next few days, boosting energy consumption.
Heavy snows and biting cold also hit parts of Asia, with unusually harsh winter weather snarling up transport across north China, South Korea and India.
Heating oil futures led the US oil complex higher, with US crude for February delivery trading up $1.92 to $81.28 a barrel lunchtime in the US, after earlier touching $81.68, the highest level since 23 October. Brent crude climbed $1.93 to $79.86 a barrel.
“Cold temperatures in the US, part of a global cold front, and a weak dollar are driving oil prices higher,” said Phil Flynn of PFGBest Research in Chicago.
City A.M. Reporter