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Oil prices extended gains in Asian trade today as extra cold weather in the United States bolstered the demand for heating fuel, analysts said.
US benchmark West Texas Intermediate crude for March delivery rose 40 cents to $97.59 in mid-morning trade, while Brent North Sea crude for March delivery added 10 cents to $105.88.
“The cold weather is probably the major cause for the rally,” Ric Spooner, chief market analyst at CMC markets in Sydney, said.
“There was also a bit of recovery last night in equity markets, which helped support the oil prices,” he said.
Winter-weary Americans were yesterday braced for another massive storm that is expected to dump as much as a foot of snow and a dangerous mix of freezing rain and sleet on a huge swath of the country.
The storm was set to reach the east coast today, weather officials said.
Expectations of a decline in US crude stockpiles at its port in Cushing, Oklahoma, also helped push prices higher as a drop would indicate stronger demand in the world’s biggest economy, analysts said.
Singapore’s United Overseas Bank said in a research note that investors expect the latest report, due later today, “to show oil inventories were beginning to drain in earnest from the benchmark’s delivery point at Cushing after the start-up of TransCanada’s Keystone south pipeline’’.
The pipeline will ease the delivery of crude oil to Gulf Coast refineries in the southern state of Texas.
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