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Oil prices higher in Asian trade as cold weather heats up demand
AFP
SINGAPORE
Petroleumworld.com 01 29 06World oil prices were higher in Asian trade Monday, driven by strong demand for heating fuel in the United States during a bout of unusually cold weather in what has been a mild winter, dealers said.
At 2:45 pm (0645 GMT), New York's main oil futures contract, light sweet crude for delivery in March, was up 42 cents to 55.84 dollars a barrel from 55.42 dollars in late US trade Friday.
Brent North Sea crude for March was 44 cents higher at 55.73 dollars.
"Prices are chasing last week's rise in New York. It's the cold weather that's the most important factor at the moment," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Prices could go to 57 or 58 dollars in the current run but are bound to ease as the Northern Hemisphere winter comes to an end.
"I think oil prices seem to be overbought at the moment. I'm not bullish on the market because oil supplies are quite sufficient at the moment and cold weather is just a temporary reason," he said.
The US National Weather Service has forecast below normal temperatures continuing in the country's northeastern region -- the world's largest heating fuel market -- for roughly the next two weeks.
Oil fell below 55 dollars on Thursday last week as the market concentrated on news that US energy reserves had risen across the board last week.
Healthy US energy stocks put a lid on prices, following an increase due to the cold snap and US President George W. Bush's announcement on Tuesday that the United States would double its strategic oil reserve.
US stockpiles of distillate products, such as heating oil and diesel fuel, increased 700,000 barrels to 142.6 million in the week ended January 19, the US Department of Energy (DoE) said on Wednesday. That confounded market expectations for a drop of 250,000 barrels.
Although US energy inventories remain ample, many analysts expect increased demand for heating oil, amid recent freezing weather, will hurt stockpile levels.
"It is worth noting that the effect of the recent cold snap may not be seen until the figures for this week, are released next week," said Sucden analyst Michael Davies.
AFP 29 0650 GMT 01 07
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