Crude oil prices hit one-month high

18 February 2010

Written by Bob Burton

Crude oil prices climbed to their highest level in a month during trading this week, with improved prospects for economic recovery in the US providing support.

A raft of corporate earnings reports and economic data published mid-week promoted a hawkish mood in New York, where stocks rose 0.4 per cent and crude oil climbed above $77 a barrel on Wednesday.

Heating oil prices also climbed during the week, breaching the $2-a-gallon target.

The latest report from the US Federal Reserve was instrumental in supporting confidence in the pace of recovery in the States, with industrial output figures rising across manufacturing, mining and utilities sectors.

Speaking to Bloomberg, Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures in New York, said that there has been a change of mood on Wall Street.

"It doesn't take any fundamental news to make this market move $10 anymore, just a simple change in sentiment is enough. The next target will be $80," he forecast.

Crude oil prices have already breached the $80-a-barrel mark this year, with the cold weather witnessed at in December and January encouraging buying activity as investors anticipated a rise in demand for heating oil and other fuels.

However, consecutive demand reports from the Energy Information Administration (EIA) and the American Petroleum Institute failed to register any substantial drop in crude or heating oil inventories during the cold snap.

This in turn contributed to crude's nosedive back towards $70 a barrel, while the strength of the US dollar also weighed on oil and other dollar-based commodities as they became less attractive to foreign buyers.

The next major market movement may come at the end of the week with the publication of the latest weekly demand figures from the EIA.

Due to be published in the US late on Friday, the inventory figures will be keenly watched by investors looking for signs demand is improving across industrial, commercial and domestic sectors.