LONDON: Oil hit a four-week high above $78 a barrel on Monday as colder weather across the United States and signs of economic recovery helped boost the outlook for fuel demand.
Oil has risen more than 12 percent from a dip below $70 two weeks ago on expectations of rising consumption and falling inventories. A US government report last week showed a larger than expected fall in crude stocks.
There were some strong draws in the stocks last week and it is cold in the US, said Olivier Jakob, analyst at Petromatrix. But the volumes are very light.
US crude rose 21 cents from Thursday s close to $78.26 by 1148 GMT, after earlier touching $78.68, the highest since Dec. 1. There was no trade on Christmas Day. Brent crude was up 34 cents at $76.65.
Near-to-below-normal temperatures are expected across much of the United States in the next several days, according to forecaster Meteorlogix earlier on Monday.
Oil is near the upper end of the $70-$80 range that Saudi Arabia, the largest exporter in the Organization of the Petroleum Exporting Countries, has said is comfortable for producers, consumers and investors.
Besides cold weather, signs of China s economic recovery and a row between Russia and Ukraine over energy added to the supportive backdrop for prices.
Profits at Chinese industrial companies returned to growth in January through November, offering clear evidence of a stronger recovery for the country s businesses, data showed on Monday.
Russia s pipeline monopoly on Monday blamed Ukrainian politicians for setting new unacceptable terms for oil transit via the port of Yuzhny, saying it will cut supplies if no quick deal was reached.
But the head of Gazprom said on Monday he expected Ukraine to pay in full for December gas deliveries and did not foresee a repeat of New Year gas rows that have cut supply to Europe in the past.
Also supporting prices, the dollar edged lower against a basket of currencies. Oil has often risen this year when the dollar softens as it makes crude more affordable for holders of other currencies.
