Singapore: Oil prices climbed near a two-year high on Thursday, boosted by an unexpected surge in global demand that has fueled the biggest drop in US crude stockpiles in more than a decade.
US crude for February rose 19 cents to $90.67 a barrel by 09:15 am, after settling on Wednesday at the highest level since October 2008. ICE Brent crude traded 19 cents higher at $93.84.
Oil has soared more than 40% since hitting a 2010 low of $64.24 in May, driven by a faster-than-expected recovery in global fuel demand.
Despite its steady climb, oil likely has further wiggle room before it begins to hinder economic growth in oil-consuming countries, analysts said.
“Oil has risen as... inventories have fallen more than expected due to the cold weather in the northern hemisphere,” said Serene Lim, an oil analyst at ANZ, adding that prices would need to rise above $110 before impacting economic growth.
US crude oil inventories fell 5.33 million barrels last week, the Energy Information Administration said.
Stockpiles in the world’s biggest oil user have fallen by 19 million barrels since 26 November, roughly equivalent to one day of US fuel consumption and the biggest three-week drop since 1998.
A Reuters poll showed a surge in fuel demand in the fourth quarter sent 2010 demand growth to near record levels, adding support to prices in recent weeks, with further increases expected next year as the economy improves.
Demand growth was still centred on the developing world, with one third of the 1.5 million barrel-per-day (bpd) global growth coming from China, according to the survey of 12 top oil-tracking analysts.
China’s apparent oil demand rose 13.9% from a year earlier to a record-high of 9.34 million bpd in November, Reuters calculations from official data showed.
Oil also found support from forecasts for cold weather in northern Europe and the United States, with US heating oil demand expected to average 4.6% above normal this week.
Forecaster AccuWeather.com expects temperatures in the US Northeast, the world’s largest heating oil market, to average mostly below normal for the next week, with slightly milder readings late this month.
In Europe, fresh snow forecasts threatened to prolong chaos caused by a cold snap, with airlines and rail networks struggling to restore normal services.