Oil prices touch two-year highs

December 24, 2010 | 09:41

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Oil prices touched two-year highs on Thursday, supported by continued cold weather in Europe and North America and positive US economic indicators.

New York's main contract, light sweet crude for February, gained $1.03 to $91.51 per barrel in the fifth straight day of gains. Earlier, it had reached $91.63, its highest level since October 2008.

Brent North Sea crude for delivery in February rose 60 cents to $94.25 per barrel after soaring to $94.54 -- a level also last seen in early October 2008.

The market spiked higher on Wednesday following news of plunging US crude reserves as demand in the world's biggest oil-consumer rises.

Investor sentiment was also spurred by cold weather, which increases demand for heating fuel.

"Cold weather in Europe has increased demand for distillate fuel, and we have seen good demand here in the US too, due to cold weather," said Andy Lipow of Lipow Oil Associates.

"World oil demand is increasing and in the short term the cold weather is contributing to that," he said.

A slew of economic data released on Thursday showed a stabilisation of jobless claims, an improvement in the housing market and a rise in consumer spending, further bolstering trade.

US crude stocks dove 5.3 million barrels in the week to December 17, more than double market expectations for a drop of 2.3 million barrels, reflecting strengthening demand in the world's biggest economy.

Gasoline (petrol) reserves rose 2.4 million barrels, much more than market expectations for a gain of 900,000 barrels.

AFP

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