The price of oil recovered slightly to above $94 a barrel Monday amid cold weather in the U.S. and as some investors sought bargains following a weeklong market plunge.
By early afternoon in Europe, benchmark U.S. oil contract for February delivery was up 38 cents to $94.34 in electronic trading on the New York Mercantile Exchange. On Friday, the contract fell $1.48, leaving it 6.4 per cent lower over the past week.
Crude prices were supported by the cold weather in the U.S. and the advance of al-Qaida militants in the western Iraqi cities of Fallujah and Ramadi, setting the stage for confrontations with government troops and increasing the risk of interruptions to oil exports.
“The fundamental focus at the start of the week is on the extreme cold in the U.S.,” said Olivier Jakob of Petromatrix in Switzerland. “End consumer demand must have been … very strong and that will make the U.S. at risk to any second cold wave as both the stocks of natural gas and heating oil are on the low side.”
Still, analysts said there risks oil prices might fall further — energy demand has not been rising as fast as expected, while supplies have been sufficient.
Also, a rising dollar could dent oil prices. The Fed recently began winding down its stimulus program, which is boosting the value of the dollar and leading investors away from oil. A stronger dollar makes commodities such as oil that are priced in dollars more expensive for buyers using other currencies.
Brent crude, used to price international crude processed by many U.S. refineries, was up 91 cents to $107.80 on the ICE Futures exchange in London.
Brent’s gains came despite reports last week that protests ended at one of Libya’s largest oil fields, which could allow the field to restart production and deliver more than 300,000 barrels of daily production to the global market.
Traders, however, consider that news on Libya’s recovering oil industry needs to be evaluated with caution, as the situation in the northern African country is still unpredictable nearly three years after the start of its 2011 civil war.
In other energy futures trading:
— Wholesale gasoline rose 2.2 cents to $2.6708 a gallon.
— Natural gas added 4 cents to $4.344 per 1,000 cubic feet.
— Heating oil was up 4.12 cents to $2.9806 a gallon.