Oil prices strike two-year high in London

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Crude oil hit a two-year peak on Tuesday, boosted by volatile thin trade, the weak dollar and freezing weather in Europe and the United States, traders said.

Brent North Sea crude for delivery in February, jumped to 93.04 dollars per barrel at about 0200 GMT. That was the highest level since October 2008.

In early afternoon London trade, Brent oil stood at 92.81 dollars, up seven cents from Monday's closing level.

New York's main contract, light sweet crude for February delivery, gained 15 cents to 89.52 dollars.

"Brent has reached the 93-dollars-a-barrel mark for the first time in 26 months," said Commerzbank analyst Carsten Fritsch.

"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.

A deep freeze chilling the European continent and northeastern United States was also fuelling an oil price rally due to increased energy demand for heating, according to analysts.

The market also won support from the weaker greenback, 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, but pared gains as Moody's warned over a possible ratings downgrade for Portugal.

© 2010 AFP

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