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Oil prices climbed back above US$59 a barrel on Wednesday as a blast of cold weather boosted heating oil demand in the United States and Opec supply cuts quickened the seasonal fall in crude stocks in industrialised countries.
The market showed gains of nearly a dollar in volatile trade after US government data showed a large fall in distillate stocks and a small but unexpected fall in crude inventories, but it then retreated from this peak.
US crude was 19 cents higher at US$59.17 a barrel by 1657 GMT, adding to a 14-cent rise on Tuesday. London Brent crude was up 22 cents at US$58.64.
Oil has recovered from a steep slide that took it to a 20-month low of US$49.90 on Jan. 18.
The rally has coincided with a drop in temperatures in top heating oil market the US Northeast, Opec supply cuts and renewed investor interest in energy.
US government data on Wednesday showed distillate stocks, which include heating oil, fell 3.7 million barrels last week as consumers burnt more fuel for heating.
The fall was more than the 3.2 million-barrel drop expected among analysts polled by Reuters.
Crude stocks fell by 400,000 barrels, in contrast to a forecast rise of 1.4 million barrels.
The icy weather in the US northeast, the world's largest heating oil market, was likely to hit stocks again next week.
"This really hard freeze didn't extend across the whole country until this weekend," said Mike Fitzpatrick, vice president at Energy Risk Management at Fimat USA.
"I think you'll have to wait for next week's numbers to get a fuller picture of heating demand."
- REUTERS
