Crude rises above US$97 a barrel as cold snap boosts demand for heating oil

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The price of oil rose for the fourth consecutive day Thursday to above US$97 per barrel as an ongoing cold spell in parts of the U.S. boosted demand for heating oil.

West Texas Intermediate crude for March delivery rose 59 cents to close at US$97.32 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oil used by many U.S. refineries, fell 69 cents to close at US$107.58 in London.

Natural gas futures rose again, adding four cents to close at $4.73 per 1,000 cubic feet, as temperatures in many parts of the U.S. Northeast remained well below freezing and forecasts called for continued cold over the next week, boosting anticipated heating demand.

Natural gas futures are up 18 per cent over the past two weeks, to their highest level since July 2011. In some regions, natural gas has skyrocketed to record prices of more than $100 per 1,000 cubic feet on the spot market.

The deep chill blanketing much of the central and eastern U.S. is also reducing stocks of heating oil as homeowners crank up the thermostat and electric utilities burn it to avoid paying for natural gas.

That, in turn is leading to higher crude prices as traders anticipate that refineries will need to process more crude to meet heating oil demand.

“The weather factor is becoming an increasingly important driver,” wrote energy analyst Jim Ritterbusch in a report Thursday.

In other energy futures trading on Nymex, wholesale gasoline fell 1.5 cents to close at US$2.662 a U.S. gallon (3.79 litres) and heating oil rose one cent to close at US$2.991 a gallon.

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