Oil climbs back above $90

28 January 2008

Crude oil prices climbed back above the $90 (€61.30) a barrel mark on Friday as news about Chinese demand for oil helped to boost confidence among traders.

Demand from the Chinese economy has helped to fuel the steep rise in oil prices during the past 12 months and a new report revealed it increased by 6.4 per cent in December - its highest growth rate since May.

Following the news, US crude for March delivery closed up $1.30 at $90.71 and the corresponding Brent crude contract climbed $1.83 to settle at $90.90. The price of heating oil futures also rose, gaining 1.73 per cent to close at $2.5191 a gallon.

The news from China built on the optimism generated among oil traders by the confirmation of an economic stimulus plan designed to stave off a recession in the US.

However, Michael Fitzpatrick of MF Global told Bloomberg the price rises of the past few days were merely a reaction to short-term factors and not an indication of a long-term trend.

"These don't change the underlying picture. We came off very quickly, which is suggestive that prices may resume the move lower at any time," he added.