Oil above 89 dollars in Asia, fuelled by Europe freeze

Friday, 10 December 2010 00:01 -     - {{hitsCtrl.values.hits}}

SINGAPORE, (AFP) -Freezing temperatures in Europe helped push oil prices above 89 dollars in Asian trade on Thursday, with sharp US crude inventory falls providing further cheer to the markets, analysts said.

New York’s main contract, light sweet crude for January delivery, was up 79 cents to 89.07 dollars a barrel.

Brent North Sea crude for delivery in January climbed 72 cents to 91.49 dollars.

Oil prices rose as Europe experienced a renewed deep freeze, analysts said.

“With temperatures remaining frigid across Europe, oil prices have received a further boost supplementing a market where fundamentals were already in a tightening mode,” Barclays Capital said in a report.

Travel chaos erupted in France and Scotland yet again after similar woes earlier in the week as renewed sub-zero temperatures forced the closure of airports, motorways and even the Eiffel Tower.

Colder temperatures cause a lift in oil demand as people use up more energy for heating.

Oil fundamentals were also seen to be improving, with latest data released by the US Department of Energy late Wednesday showing a sharper-than-expected decline in the crude reserves of the world’s biggest oil consumer.

The data showed US reserves shrinking by 3.8 million barrels in the week ending December 3, beating market expectations of a 1.2 million barrel drop, according to analysts polled by Dow Jones Newswires.