Oil rose one percent toward $53 a barrel on Monday after a drop in temperatures in the world's biggest heating oil market, the U.S. Northeast, and stubborn price support at $50 spurred a fresh round of investor buying, Reuters reports.
U.S. crude was up 67 cents at $52.66 a barrel by 1108 GMT off a session high of $53.05, extending Friday's gains of $1.51. London Brent was up 36 cent at $53.80.
Temperatures in the U.S. Northeast were expected to average below normal for the next six-to-10 days, private forecaster DTN Meteorlogix has said. It added temperatures in European cities will mostly drop in the next few days.
Investment fund selling in early January and a mild start to the northern hemisphere winter have wiped about 14 percent off oil so far this year. Prices are well down on their July 2006 record of $78.40, easing the strain on world economic growth.
News of a 6.8 million barrels increase in U.S. crude stocks on Thursday tipped oil to $49.90 a barrel, but some analysts say the break below $50 was unconvincing.
"There was a strong bounce off $50 -- there are a couple of signs the market may have bottomed," Tony Nunan of Mitsubishi Corp.'s risk management unit said.
Olivier Jakob at Swiss-based analysts Petromatrix said the latest investment flow data published by New York's Nymex exchange showed large speculative funds had significantly reduced their net short position in U.S. crude oil.
(Reuters, 22/01/2007)