Oil Above $83 As Cold Snap Continues 10-day Rally
NEW YORK - Oil prices rose on Wednesday, in a tenth straight day of gains, as expectations cold weather will boost heating fuel demand outweighed a U.S. inventory report showing a build in crude stocks.
U.S. crude for February delivery rose $1.41 to close at $83.18, the highest settle since $86.59 on October 9, 2008. London Brent crude gained $1.30 to settle at $81.89 a barrel.
Crude prices initially dipped after the weekly report by the U.S. Energy Information Administration (EIA) showed a 1.3-million-barrel increase in crude oil stockpiles.
Stockpiles of distillates, including heating oil, fell by 300,000 barrels in the week to January 1, less than the 1.9 million-barrel draw forecast by analysts.
However, crude prices rose on expectations of a bigger inventory draw next week due to colder weather across much of the United States, analysts said.
"Everybody knew coming in today that the distillate number for next week is going to be huge because of the brutally cold temperatures that we saw over the weekend and are still seeing," said Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut.
Arctic winds have pushed down into the Northern Hemisphere, freezing Europe and parts of Asia and boosting demand for heating in the United States some 21 percent above normal. Energy demand has also surged in Europe, especially Britain and France.
Elsewhere, icy weather descended on northern China over the last week, bringing heavy snow and record low temperatures to Beijing and causing cities across eastern and central parts of the country to begin rationing power.
Crude also found support as talks continued between Belarus and Russia on Wednesday over the supply of Russian oil for 2010. Belarus earlier insisted Russia should continue billions of dollars in oil subsidies, potentially complicating talks aimed at resolving a dispute over a pipeline that brings 10 percent of Europe's crude to market.
(Editing by Christian Wiessner and Lisa Shumaker)