Oil prices trading higher on colder weather in US and Europe

Crude oil prices rose during Asian trading Friday as investors bet that colder than normal temperatures in the US and Europe would spur a drawdown in bloated oil product stockpiles, which have weighed heavily on oil prices.

Between January and March, below-normal temperatures are expected from the US Gulf Coast to the mid-Atlantic region, the National Oceanic and Atmospheric Administration said Thursday. Meteorologists are also anticipating colder weather in the eastern US until the end of December.

“There is a lot of focus on the short-term weather forecast,” said Mark Pervan, head of commodity research at ANZ in Melbourne. “Cold weather in the US and Europe tends to cause a rise in sentiment.”

On the NYMEX, Light crude oil futures for delivery in January traded at $72.96 a barrel at 0643 GMT, up $0.31, while in London, Brent crude oil futures on London’s ICE Futures exchange rose $0.20 to $73.57 a barrel.

Oil prices were also supported “by large speculative entities looking to capitalize on this week’s momentum boost,” according to Jim Ritterbusch, president of Ritterbusch & Associates. “The market may experience difficulty in pushing back to below the $70 mark through the rest of this year,” he said in a note to subscribers. As the holidays approach, thinner trading volumes would likely lead to more price volatility, Pervan said.

“The market is going to trade fairly sideways to mildly weaker,” he said. “Prices at the moment are about fair value to the current level of oil demand.”

Tags:  Europe, oil prices, trading, US, weather