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NEW YORK - Oil rose more than 2 per cent to top US$55 a barrel on Friday on expectations cold weather in top consumer the United States would trigger a long-awaited rise in heating oil demand.
US crude CLc1 settled up US$1.19 at US$55.42 a barrel, after a US$1.14 slide on Thursday. London Brent crude LCOc1 jumped US$1.17 to US$55.29.
"Opec cuts are gradually draining the surplus and winter has finally returned," said Nauman Barakat, senior vice president at Macquarie Futures USA.
He added that a risk premium was coming back to the market as political tensions between the United States and Iran grew.
Temperatures in the US Northeast, the world's biggest heating oil market, were expected to stay below normal for at least the next week, according to AccuWeather.
Unseasonably mild weather and a shift in fund flows had pushed oil down by as much as 18 per cent this month, but the market's failure to break significantly below US$50 a barrel last week has led to a rebound in prices.
"With weather forecasts constantly shifting back and forth, price action should be expected to remain volatile with a downward basis," said Mike Fitzpatrick, vice president for energy risk management at Fimat USA.
The Organisation of the Petroleum Exporting Countries has said it would wait to assess the impact of existing cuts before calling for further reductions.
The cartel agreed last year to curb output by 1.2 million bpd, or 4 per cent, from Nov. 1 and another 500,000 bpd from February 1 this year after a sharp slide in prices.
Opec oil exports fell by close to 1.9 million day (bpd) from October to the end of December, according to shipping data released by Lloyd's Marine Intelligence Unit on Friday.
But a report by Roy Mason of oil consultancy Oil Movements released on Thursday said Opec exports will rise 270,000 barrels per day (bpd) in the four weeks to February 19.
Rising geopolitical tensions, which helped push US crude to a record over US$78 in July, added support to prices.
The Bush administration in recent weeks has toughened its stance against major oil producer Iran, which the West has accused of seeking to build secretly an atomic bomb.
- REUTERS
