Oil Holds Above 81 Dollars

LONDON News: World oil prices rose on Tuesday, holding above 81 dollars per barrel, supported by increased consumption of heating fuel because of cold weather in the northern hemisphere, analysts said.

New York’s main futures contract, light sweet crude for delivery in February, gained 12 cents to 81.63 dollars a barrel.

Brent North Sea crude for February delivery added 16 cents to 80.28 dollars in London trading.

Oil had begun 2010 with a bang on Monday, soaring by more than two dollars as cold weather boosted expectations of higher energy demand.

Reports that Russia cut supplies to Belarus also helped push prices higher, dealers said. Officials in Belarus denied it had cut supplies.

“Cold weather across the Northern Hemisphere propelled crude prices two dollars higher,” said PVM analyst David Hufton.

“Help also came from Russia’s oil dispute with Belarus and universally positive manufacturing data from China, India, Korea, the UK and US.”

“On the weather front, in the US heating oil demand is expected to be 21 percent higher than normal this week,” he added.

There was news on Monday of robust activity in the US manufacturing sector, in a further sign that the US economy — a key engine for global growth — is well on its way to recovering from a deep recession.

The Institute for Supply Management said its manufacturing index, also known as the purchasing managers index, climbed to 55.9 percent in December from 53.6 percent in November, for a fifth consecutive month of expansion.

The figure was stronger than the consensus estimate of a modest rise to 54.3 percent. Any number above 50 percent indicates growth.

Separately, a survey showed on Monday that manufacturing in China continued to expand in December as new orders received by factories rose for the ninth month in a row on booming demand from home and abroad.

“Signs of improving conditions in US and Chinese manufacturing helped spur buyers into the oil markets,” said ODL Markets analyst Marius Paun, adding that oil prices have now rallied by around 15 percent since mid-December.

Meanwhile on Monday, a spokeswoman for oil refineries in Belarus denied reports that Russia had cut oil supplies from January 1.

Both of Belarus’s oil refineries are working normally and Russian oil is arriving on schedule, a spokeswoman for oil processor Belneftekhim told AFP.