NEW YORK: Oil rose on Monday to touch a five-week high over $79 a barrel as expectations of colder weather in the United States and signs of economic recovery boosted the outlook for fuel demand.
US crude traded up 82 cents from Thursday’s close to $78.87 by 1:18 a.m. EST (1818 GMT) in thin trade, after earlier touching $79.12, the highest since Nov. 23. Oil markets were shut on Friday for the Christmas holiday. Brent crude rose 90 cents to $77.21 a barrel.
Oil has climbed more than 12 percent from a dip below $70 two weeks ago on expectations of rising consumption and falling inventories in the United States, where companies have been drawing down stockpiles for end-year tax purposes.
“There were some strong draws in the stocks last week and it is cold in the US,” said Olivier Jakob, analyst at Petromatrix. “But the volumes are very light.”
Temperatures in the US Northeast — the world’s largest heating oil market — were expected to average above normal on Monday before dipping to below normal through Friday, private forecaster DTN Meteorlogix said.
Oil has edged toward the upper end of the $70-$80 range that Saudi Arabia, the largest exporter in the Organization of the Petroleum Exporting Countries, has said is comfortable for producers, consumers and investors.
US stocks rose modestly as rising commodity prices boosted resource companies and retailers gained after data pointed to a better performance for the key holiday shopping season.
Major indexes edged higher in midday trading Monday after data showed shoppers spent more freely this holiday season, a good sign that consumers are feeling better about the economy.
Signs of China’s economic recovery added to the supportive backdrop for prices. Profits at Chinese industrial companies returned to growth in January through November, offering clear evidence of a stronger recovery for the country’s businesses.
News that Russia and Ukraine on agreed on the terms of a new deal governing the transit of oil exports to Europe eased concerns about a potential disruption.
Russia has warned of possible disruption of oil shipments to Slovakia, the Czech Republic and Hungary, saying Ukrainian state energy company Naftogaz was seeking higher transit tariffs to reflect inflation and maintenance costs.
A year ago, Russia halted gas supplies through Ukraine for two weeks amid a price dispute with Kiev, resulting in a two-week supply cutoff to some Eastern European customers beyond Ukraine. Millions Europeans were left without gas for two weeks in January.
