US cold snap pushes oil price to post-Iraq high

WORLD oil prices rose sharply again on Tuesday, trading at a post-Iraq war peak on worries that a cold snap in the US will further bite into US crude inventories that are already near five-year lows.

Also sustaining oil prices was further weakness of the dollar against other leading currencies, encouraging speculators to push cash into oil.

US crude price was up 57c at $34.35 a barrel, its highest since before the Iraq invasion, sustaining the strength that last year pushed prices to the highest annual average in more than two decades.

London Brent crude rose 50 cents to $31.39 a barrel.

“We are seeing prices now that we would normally see only during wars or in times of extreme political unrest,” said Frederic Lasserre, energy analyst at Societe Generale in Paris.

“The driver clearly has been US heating oil, which has outperformed the rest of the complex because of low inventories and the forecasts for colder weather,” he said.

US forecaster Meteorlogix predicted the US Northeast, the world’s biggest heating oil market, would see a blast of Arctic air sweeping in over the next few days.

Oil dealers fear this will spark fresh demand at a time when inventories of crude, heating oil and natural gas are already low.

The US Energy Information Administration said last week that crude inventories fell by 3.8 million barrels to stand 27 million barrels under the five-year average.

While oil and products supplies remain low, there is no sign that OPEC might consider providing more oil to world markets.

It next meets on February 10.