Crude traded near a two-year high in New York on speculation that cold weather in the U.S. and Europe will boost demand in industrialized nations.
New York, the biggest city in the world’s largest oil consumer, suffered the heaviest December snows in six decades as storms spread across the eastern U.S. Oil fell yesterday after China raised benchmark lending and deposit rates.
“Oil is more or less balanced between positive data from cold weather in Europe and the U.S., and negative data from China’s latest interest rate hike,” said Daniel Briesemann, a commodities analyst at Commerzbank AG in Frankfurt. “I don’t expect a big move in one or the other direction this week as volumes are very low. When traders return in the New Year, we’ll get a better picture of the price direction.”
Crude for February delivery was at $91.20 a barrel, up 20 cents, in electronic trading on the New York Mercantile Exchange at 1:18 p.m. London time, after rising as high as $91.44. Brent crude for February settlement rose as much as 30 cents to $94.15 a barrel on the London-based ICE Futures Europe exchange.
The New York contract lost 51 cents yesterday after rising to $91.88, the highest since Oct. 7, 2008, as China’s second interest-rate increase this quarter bolstered concern that growth will slow in the biggest energy-consuming country.
Winds on the U.S. east coast may “quickly” cover roads with snow, even though storms have ended, according to a winter weather advisory from the National Weather Service late yesterday. The wind-chill factor pushed temperatures in New York City’s Central Park to 20 degrees Fahrenheit (minus 7 Celsius) at 7:51 a.m. local time, according to data on its website.
Oil also retraced some of yesterday’s 0.6 percent drop before an Energy Department report forecast to show U.S. inventories shrank for a fourth week, the longest stretch of declines in a year. The dollar fell for a fourth day, bolstering the investment appeal of commodities.
U.S. oil stockpiles probably decreased 3 million barrels from 340.7 million in the week ended Dec. 24, according to the median estimate of nine analysts surveyed by Bloomberg News. Supplies have fallen this month by 19 million barrels, or 5.3 percent, the most since December 2006.
The Energy Department will release its weekly report at 11 a.m. in Washington on Dec. 30, a day later than usual because of Christmas. The American Petroleum Institute, which collects stockpile information on a voluntary basis, will release its weekly report tomorrow, also a day later than usual.
“We are looking ahead to this week’s reports to get a picture of the relative supply and demand factors as they exist here at the end of 2010,” Peter Beutel, president of Cameron Hanover Inc., an energy adviser in New Canaan, Connecticut, said in a note today. “If nothing else, they may tell us more about the economy.”
Oil, which rallied 78 percent in 2009, has risen 15 percent this year as signs of a global economic recovery bolstered optimism fuel demand will grow.