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LONDON - Oil rose today, adding to sharp gains made the previous session on expectations that a cold spell in the US Northeast this weekend would boost demand in the world's biggest heating oil market.
US crude climbed 60 cents at US$60.92 a barrel by 1849 GMT after trading at a two-week high of US$61.20 in earlier activity, adding to gains of US$1.08 on Monday. London Brent crude rose 69 cents to US$61.13 a barrel.
Despite the rally, oil has been stuck in a two-month trading rut of US$58-US$62 a barrel and showed few signs of resuming a climb back toward a record high of US$78.40 a barrel hit in mid-July.
Bulging inventories have helped cap prices, with analysts looking to the release of weekly US government data tomorrow for further market direction.
US crude stocks fell 100,000 barrels last week, according to a Reuters poll of analysts ahead of the data, as refinery utilisation rates were forecast to rise by 0.8 percentage points.
Distillate stocks were expected to increase by 400,000 barrels and petrol stocks by 500,000 barrels, according to the poll.
"The price is really treading water ahead of the inventory data," said Jason Schenker, economist for Wachovia Bank. "The inventory expectations really seem split this week."
Private forecaster AccuWeather said yesterday cold weather would sweep into the US East Coast by the weekend, ending a stretch of above-normal temperatures that has curbed demand.
The National Weather Service said yesterday US heating demand this week would be about 24 per cent below normal.
Nymex heating oil futures rose 0.6 per cent today.
The market also found support from a weaker dollar, which traded near a 20-month low against the euro.
"Oil's short-term rise is mainly fuelled by the weakness in the dollar, which has triggered speculative buying in the broader commodity sector," said Frederic Lassere of SG CIB Commodities.
US Federal Reserve Chairman Ben Bernanke on Tuesday said the economy of the top energy consumer is poised to expand at a moderate rate and that "uncomfortably high" core inflation should slow.
Inflation risks are "primarily to the upside", he added. Some energy analysts have said concern a slowing of economic growth in consuming nations could damp oil demand.
China's top energy official said today that his country aimed to fill its strategic reserves during price dips. Pent-up Chinese demand to build these reserves is helping to underpin prices.
"When international oil prices come down, we will store some (oil)," Chen Deming, vice chairman of the energy policy-setting National Development and Reform Commission, said.
The market is also looking ahead to an Opec meeting on Dec. 14 that could result in a further output cut. Opec agreed at an emergency meeting in October to remove 1.2 million barrels per day from oversupplied markets.
(Additional reporting by Cho Mee-young in Singapore and Randy Fabi in London)
- REUTERS
