Singapore: Oil prices rose on Monday as forecasts for freezing temperatures in Europe and the US Northeast this week looked to boost heating fuel demand.
US crude for January delivery climbed 14 cents to $88.16 a barrel by 08:30 am, adding to gains from the previous session. The January contract expires at the end of trading on Monday.
ICE Brent for February rose 17 cents to $91.84.
“Prices are going back up because of the really bad weather in the United States and Europe,” said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
The US Northeast, the world’s top heating oil market, was expected to be colder than usual from 24 December to 28 December, according to weather data released on Friday.
In Europe, Arctic conditions were expected to continue in the north this week, potentially prolonging travelling disruptions during one of the busiest times of the year.
US heating oil futures nudged up 0.68 cents to $2.4805 a gallon, while gasoline rose 1.37 cents to $2.3315 a gallon.
“Expectations of strong holiday driving demand and colder weather predictions lifted gasoline futures, which also buoyed the crude market,” said ANZ Commodity Research in its daily market report.
Oil prices also found support from renewed tensions in the Korean Peninsula and positive US economic data.
South Korea will go ahead with live firing drills from a disputed island on Monday, local media said, despite threats of attack by Pyongyang and pressure from Russia and China to cancel the exercise.
“This bit of tension could see investors pulling out of stocks and go into commodities,” Nunan said.
In the United States, the Conference Board’s measure of leading economic indicators jumped 1.1% in November, the biggest rise since March and the fifth straight monthly gain for the world’s largest oil user.
It was the latest evidence of steady, if erratic, improvement in the economy’s prospects after a summer lull.