Oil prices strike new two-year high
Oil hit another two-year high on Tuesday in volatile thin trade, boosted by a weak dollar and freezing weather in Europe and the United States, traders said.
Brent North Sea crude for delivery in February jumped to 93.43 dollars per barrel -- the highest level since October 2008. It later stood at 93.33 dollars, up 59 cents from Monday's closing level.
New York's main contract, light sweet crude for February, added 25 cents to 89.62 dollars.
"Brent remained strong and hit a two-year high today, following cold weather conditions across Europe that increased the demand for oil," said Sucden analyst Myrto Sokou.
"It seems that there is some technical buying in the oil market as we are approaching the year-end," she added.
Colder weather in the European continent and northeastern United States has boosted expectations for heating fuel demand ahead of the Christmas break, helping push up oil prices.
"Brent has reached the 93-dollars-a-barrel mark for the first time in 26 months," Commerzbank analyst Carsten Fritsch noted.
"As trading volumes get thinner, we may well see erratic and rather incomprehensible price movements at times.
"The cold winter weather in Europe can only partly explain the rise in crude oil prices," added Fritsch.
The market also found support from a weaker dollar, which makes dollar-priced oil cheaper for buyers using stronger currencies. In turn, that tends to stimulate demand and prices.
The euro bounced above 1.32 dollars on Tuesday after China expressed support for EU measures to tackle the eurozone debt crisis.
Chinese Vice Premier Wang Qishan said that China supports the measures taken by the EU and the International Monetary Fund to aid financial stability in the eurozone.
Last week, EU leaders pledged to defend debt-plagued eurozone nations with a permanent bailout mechanism from mid-2013 -- the successor to a temporary, IMF-backed trillion-dollar facility.
Greece and Ireland have both been bailed out by the EU and the IMF. Portugal, Spain, Belgium and even Italy are considered at risk by experts going into 2011.
However, the euro pulled back slightly on Tuesday after Moody's warned of a possible ratings downgrade for Portugal.
© 2010 AFP