Oil: Price jumps 4 per cent on Riyadh bombs and US stock draw

NEW YORK - Oil prices rose for a second day on Wednesday after twin car bombs exploded in Saudi Arabia's capital and the US government reported another decline in lean winter heating fuel stocks.

US light crude oil futures settled up US$1.87, or 4.47 per cent, at US$43.64 a barrel on the New York Mercantile Exchange.

In London, Brent crude fell 90 cents to US$39.40, catching up with heavy US losses earlier this week when the International Petroleum Exchange was closed.

In Saudi Arabia, militants tried to storm two buildings in Riyadh on Wednesday, but were blocked and detonated their cars outside the gates, a security source said.

One of the car bombs exploded near the Interior Ministry, and the other close to a centre for special forces. There was no immediate word of casualties.

Saudi Arabia has been rocked by a surge of Islamic militant violence in which about 170 people have been killed, including Westerners, since May 2003.

Earlier, prices rose after the US Energy Information Administration said stocks of distillate fuel, including heating oil and diesel fuel, dropped by 800,000 barrels last week to 119.1 million barrels.

Lower-than-normal temperatures last week helped pull down heating oil stocks, which are more than 12 per cent below last year.

"There were really no significant surprises. The distillate number was in line with street ideas," said Jim Ritterbusch, president of Ritterbusch and Associates.

Prices have fallen heavily in recent sessions as mild weather forecasts have eased supply fears.

US home heating needs were estimated to be nearly 18 per cent below normal for this week, the US National Weather Service forecast on Monday.

Oil prices are nearly US$10 more than the start of the year, but some US$12 below record highs hit in late October, as signs grow that this year's price rally was eroding fuel demand growth.

Opec producers agreed this month to trim 1 million barrels per day of excess supply from Jan. 1 to prevent stocks building too fast.

Iraq's oil exports from its southern Gulf ports have resumed after bad weather stopped loadings. The country's northern exports remained at a standstill following pipeline sabotage 11 days ago.

In Asia, the death toll after Sunday's huge earthquake and tsunami climbed above 77,000, but oil production, shipping and refining operations were unaffected.

- REUTERS