Oil extends gains to near $92 on lower inventories

Friday, 14 January 2011 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Oil extended gains on Thursday to hold under $92 a barrel, buoyed by signs of higher demand after US crude stockpiles fell more than expected and a cold snap swept through the US Northeast, the region’s largest heating oil market.

Reflecting the overall bullish sentiment, European benchmark ICE Brent crude held steady under $100 a barrel on Thursday, but was off 27-month peaks hit in the previous session.

The market will scour weekly US employment data for more clues to the health of the world’s largest economy. The data released so far has delivered mixed signals. While the country’s unemployment rate has fallen by a hefty amount in December, far fewer workers were added than expected.

“We’re seeing a very strong market in crude after four consecutive sessions of gains. There are expectations of continued growth in demand after the bigger-than-expected drop in US crude stocks,” said Matthew Lewis, an analyst with CMC Markets in Sydney.

“It’s a “risk-on” environment right now, where speculators are happy to see oil creeping higher. We expect the price to hit $100 in the next few weeks, but there will be strong headwinds at this level, with significant profit-taking setting in.”

US crude for February delivery rose 12 cents to $91.98 a barrel by 0430 GMT, after settling up 75 cents at a 27-month high of $91.86 a barrel on Wednesday.

London Brent was up 24 cents to $98.36 a barrel, after rising 51 cents to settle at $98.12 a barrel, having touched $98.85 a barrel earlier, its highest level since Oct 1, 2008.

Brent’s premium to US crude stood at $6.38 a barrel, the highest in eight months after the premium rose to nearly $6 a barrel last May.

US oil inventories fell for the sixth straight week, slashing supplies by 2.15 million barrels in the week ending Jan. 7, the Energy Information Administration said.

Gasoline and distillate stockpiles rose, while heating oil inventories fell as cold weather boosted demand in the US Northeast and pushed heating oil futures to 27-month highs.