US crude rises as cold weather feeds heating oil demand

February 20, 2014 - 1:00:03 am
NEW YORK: US crude oil prices rose yesterday as a fresh bout of freezing weather boosted heating oil demand, while traders weighed concerns that political tensions in Africa and Venezuela could squeeze global supplies.

An unusually cold winter in North America has drawn heating oil inventories down to record lows. Weekly data due today is expected to show a 2-million-barrel drop last week in US distillates stocks, including heating oil. 

Global supply concerns persisted as output from Libya has yet to recover, and political protests in Venezuela turned violent.

“The market continues to be supported by oil demand lead by heating oil, but supply issues from Libya and concern about the violence in Venezuela are making traders nervous,” said Andy Lipow, president of Lipow Oil Associates in Houston.

The battered US dollar, which hovered around its lowest price this year against a basket of currencies, also gave a boost to crude oil and commodities priced in the dollar. 

US crude was up 59 cents at $103.02 by 17.42 GMT, after it touched an earlier session high of $103.34, its highest since October 10. The contract expires today.

Brent crude fell 2 cents to $110.43 after settling on Tuesday at its highest level this year.

Brent’s premium to US crude futures fell as low as $7.64 earlier in the session, its lowest since October 10, having traded as high as $15.51 in January. The spread last traded at $7.79.

US ultra-low sulfur diesel, commonly known as heating oil, rose nearly 4 cents to trade at $3.1397 per gallon. On Tuesday, political factors pushed Brent oil to its highest close this year. Strife in South Sudan and Libya disrupted oil supply, while protests in Venezuela raised concerns. In Libya, oil output was down at 375,000 barrels per day (bpd) on Tuesday as protests continued to affect a pipeline from the major El Sharara field, a National Oil Corporation spokesman said.  

Six world powers and Iran started a second day of talks in Vienna on Tehran’s contested nuclear programme, seeking to close a vast gap in expectations about what a final agreement should look like.