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Oil held near US$59 a barrel on Tuesday as bitter cold continued to blast the United States, bolstering demand for heating fuels in the world's biggest energy consumer.
US crude oil rose 16 cents to US$58.90 a barrel by 1902 GMT after racing up to a one-month high of US$59.99 in earlier activity. London Brent crude gained 34 cents to US$58.44.
"The market is looking for leadership in winter fuels and when heating oil didn't scream, but instead slipped from its early high and natural gas dropped, the run toward US$60 could not be sustained," said Andrew Lebow, a broker at Man Financial.
The onset of cold weather in the US Northeast, the single largest heating oil market, and a shift in investment flows has lifted oil from a 20-month low of US$49.90 on Jan. 18.
Last time oil reached these levels -- it peaked at US$78.40 in July 2006 -- consumer nations led by the United States called on the Organisation of the Petroleum Exporting Countries to increase oil supplies to protect economic growth.
"At the margins (US$60 oil) is bad for the economy, higher prices are not a good thing. I guess we weren't down at US$50 long enough for many people to have adjusted to a world where oil prices permanently at US$50," said Tony Dolphin, director of economics and strategy at Henderson Global Investors, which has more than 63.1 billion pounds (US$123.5 billion) under management.
- REUTERS
