Oil prices extend gains above $78 per barrel in Asia
As a result of a notable boost to the outlook for fuel demand, thanks to cold weather conditions across the US and signs of an economic recovery, oil prices hit a four-week high – by extending gains in Asia above $78 per barrel on Monday.
With the recent hike in oil prices marking a turnaround from a two-and-a-half months’ low of below $70 a barrel two weeks back, analyst Tomokazu Amano, of Tokyo’s Mitsubishi Corp Futures & Securities, said: “The market is getting support as a cold wave in the U. S. Northeast is projected to boost demand.”
The hike highlights the projections for an increase in demand, more so as the recent US government statistics reveal large successive drops in the country’s crude and distillate inventories.
As the benchmark crude for February delivery increased 48 cents to $78.53 at midday Singapore time in electronic trading on the New York Mercantile Exchange, Clarence Chu, a trader with Singapore’s Hudson Capital Energy, commented that the later-this-week inventory figures from the Energy Information Administration will determine whether oil prices end the year at more than $80 per barrel.
However, noting that though “an upside bias” may see the oil prices closing the year above $80 per barrel, Chu added that the “fundamentals are still weak,” and crude inventories may build up again next month, thereby dragging down oil prices back to $70 per barrel.