Oil prices strike yet another two-year peak

Thursday, 23 December 2010 00:33 - - {{hitsCtrl.values.hits}}

LONDON, (AFP) - Crude rallied to another new two-year peak Wednesday on the back of cold weather in the northern hemisphere, the weak dollar and bullish Chinese energy demand, analysts said.

Brent North Sea crude for delivery in February, jumped to 93.79 dollars per barrel -- the highest level since October 2008. It later stood at 93.60 dollars, up 40 cents from Tuesday’s closing level.

New York’s main contract, light sweet crude for February delivery, gained 36 cents to 90.18 dollars. Meanwhile, the US Department of Energy will later publish a weekly report on American energy reserves for the week ending December 17.

“The prolonged cold snap in Europe and the US northeast is still supportive,” said VTB Capital commodities analyst Andrey Kryuchenkov.

“Today, the market is turning its attention back to US fuel inventories,” he added.

Icy weather across Europe and northeastern US states -- which forecasters said would last until the end of the year -- would lift crude prices as demand for heating oil increased. “Oil prices remain supported on cold weather and strong demand indications, with Chinese oil demand, along with gasoline, diesel and jet fuel demand, surging to record highs in November,” Barclays Capital added in a report.Final Chinese oil consumption data for November released Tuesday also showed the world’s biggest energy consumers’ use “at a record high of 9.33 million barrels a day (mdb),” the Barclays Capital report stated.

The level was “up a phenomenal 1.145 mbd (14 percent) year-on-year, the strongest year on year growth rate since February this year,” it added.

“The fourth quarter has seen an acceleration of Chinese oil demand growth once again. “To state that Chinese oil demand has surprised to the upside this year is a no-brainer, but we have a strong suspicion that upside surprises and the resultant global demand upgrades have not yet run their full course,” the report said.