World oil prices, which have soared more than 70 percent this year on global economic recovery signs, rose Thursday as solid US demand underpinned the market on the last trading day of 2009, traders said.

New York’s main futures contract, light sweet crude for delivery in
February, gained 33 cents to 79.61 dollars a barrel, after earlier
rising as high as 79.98.

Brent North Sea crude for February won 34 cents to reach 78.37 dollars in late morning London trading.

Prices were also supported this week by cold winter weather in the
northern hemisphere — which increases demand for heating fuel — and
geopolitical concerns over crude producer Iran.

“Cold weather and perhaps events in Iran have been supportive of oil prices in the last week,” said PVM analyst David Hufton.

“Yesterday additional support, at least at the headline level, came from the (US) stocks figures.”

Oil rose Wednesday on news of a drop in US petroleum reserves, which
suggested stronger demand in the world’s biggest energy-consuming
nation.

The US Department of Energy (DoE) said Wednesday that crude stockpiles
sank by 1.5 million barrels in the week ending December 25 and
distillates — which include heating fuel and diesel — dropped 2.0
million barrels.

Though the figures were in line with forecasts by analysts polled by
Dow Jones Newswires, they added to the massive drawdowns seen in the
prior week, with declines of 5.0 million and 3.0 million barrels,
respectively.

Declining stockpiles indicate strengthening demand in the United
States, the world’s biggest economy and the largest consumer of energy.

Since the start of the year, London Brent oil has jumped by 72 percent
in value and New York crude has rocketed by about 78 percent.

Crude oil has surged in 2009 as traders were heartened by mounting
evidence that the battered global economy was on the mend, with the
eurozone, Japan and the United States escaping a fierce recession.

The worldwide economic downturn, which was sparked by the global
financial crisis, had slammed demand for energy and sent oil prices
plunging to around 33 dollars towards the end of 2008.

“So much then for 2009, a year that the oil market spent mainly in a
recovery mode,” said Barclays Capital analyst Paul Horsnell.

“It produced a (New York oil price) average of about 62 dollars per
barrel, encompassing a low of 33 dollars per barrel and a high of 82
dollars per barrel, with prices finishing the year close to the highs
after a steady ten-month climb.”

However, prices still remain far below the record high points of above
147 dollars per barrel that were struck in July 2008 on fears of supply
disruptions.

Meanwhile last week, the Organization of Petroleum Exporting Countries
held its crude output quotas unchanged at its meeting in Angola,
warning of lingering weakness in the world economy.

The OPEC meeting capped a year of recovery for oil prices, which have
more than doubled since the cartel set strict quota cuts in the depths
of the economic crisis a year ago.

In January the cartel enforced total OPEC cuts of 4.2 million barrels a day, which has helped prices recover somewhat.

Source: AFP

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