Oil breaches $80 on seasonal demand

4 January 2010

Crude oil prices have risen above $80 (£49) a barrel on the New York Mercantile Exchange, with freezing temperatures in the US fuelling speculation that demand for heating oil and other fuels will improve.

Near-term crude oil contracts have not traded above $80 since November 18th, but in today's (January 4th) electronic session, buying activity from overseas investors added more than $1 to the price of the commodity, adding to its impressive rally witnessed at the end of the year.

Speaking to Bloomberg, Ben Westmore, a minerals and energy economist at National Australia Bank, commented: "There are further indications that the recovery is progressing. It's also been pretty cold in the US and that's also been supportive."

The UK and Ireland have also witnessed a cold snap in recent weeks, with sub-zero temperatures expected across both countries over the coming week.

In addition to causing travel disruption, the recent cold snap may also have driven up demand for heating oil and other domestic and commercial heating fuels.

Click here for a home heating oil quote