Crude Oil Rises in New York as Cold Weather Boosts U.S. Demand

December 28, 2009

Crude Oil Rises in New York as Cold Weather Boosts U.S. Demand

Crude oil rose for a fourth day as forecasts of colder-than-normal weather in the U.S. increased demand for heating fuels. Crude for February delivery rose as much as 63 cents, or 0.8 percent, to $78.68 a barrel, the highest since Dec. 1, and traded at $78.47 a barrel in electronic trading on the New York Mercantile Exchange at 11:24 a.m. London time.

 Heating oil for January delivery gained 1 percent to $2.06 a gallon. Cold weather will raise U.S. consumption of heating fuels by 6.7 percent in the next seven days, according to forecasts from Weather Derivatives. The temperature in New York may fall as low as 20 degrees Fahrenheit (minus 7 Celsius) tomorrow, 5 degrees below average, according to Weather.com.

 “It is cold in the U.S.,” said Olivier Jakob , managing director of Zug, Switzerland-base Petromatrix GmbH. “That’s going to bring some additional demand.” U.S. inventories of distillate fuel, including heating oil and diesel, fell 1.8 percent to 161.3 million barrels the week ended Dec. 18, the lowest since July, U.S. Energy Department data show.

Crude inventories dropped to 327.5 million barrels, the lowest since Jan. 9. Oil, which has gained 75 percent this year, is headed for its biggest yearly increase since 1999 amid speculation a worldwide economic recovery is accelerating, raising energy demand.

The International Energy Agency raised its forecast for 2010 global oil demand to 86.3 million barrels a day on Dec. 11, 130,000 barrels a day more than its previous estimate. Economic Recovery The number of Americans filing claims for unemployment benefits last week declined to the lowest level since September 2008, the Labor Department said Dec. 24.

 Initial jobless claims fell by 28,000, more than forecast, to 452,000 in the week ended Dec. 19. The U.S. is the world’s biggest energy consumer. Crude may rise this week on speculation fuel inventories will shrink as imports drop and demand increases, a Bloomberg News survey showed. Thirteen of 27 analysts and traders, or 48 percent, said futures will gain through Dec. 31, the most bullish response since June.

Twelve respondents, or 44 percent, forecast the market will be little changed and two said prices will decline. Brent crude for February settlement rose as much as 72 cents, or 0.9 percent, to $77.03 a barrel and traded at $76.91 at 11:25 a.m. on the ICE Futures Europe exchange in London.   

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