NEW YORK (Reuters) - Oil rose on Monday to touch a five-week high over $79 a barrel as expectations of colder weather in the United States and signs of economic recovery boosted the outlook for fuel demand.
U.S. crude settled up 72 cents at $78.77 a barrel in thin trade, after earlier touching $79.12, the highest since November 23. Heating oil futures led gains in the oil complex as forecasters called for colder weather in the United States.
Brent crude rose $1.01 to settle at $77.32 a barrel. Energy markets were shut on Friday for the Christmas holiday.
Oil has climbed more than 12 percent from a dip below $70 two weeks ago on expectations of rising consumption and falling inventories in the United States, where companies have been drawing down stockpiles for end-year tax purposes. <EIA/S>
“The market continues to climb on bullish momentum. Cold weather, economic optimism, Russian/Ukraine concerns, possible further draws in this week’s inventory reports, all are in the mix,” said Tom Bentz, analyst at BNP Paribas Commodity Futures Inc.
Temperatures in the U.S. Northeast -- the world’s largest heating oil market -- were expected to average above normal on Monday before dipping to below normal through Friday, private forecaster DTN Meteorlogix said.
News that Russia and Ukraine agreed on the terms of a new deal governing the transit of oil exports to Europe eased concerns about a potential disruption, which had supported prices early Monday.
Oil has edged toward the upper end of the $70-$80 range that Saudi Arabia, the largest exporter in the Organization of the Petroleum Exporting Countries, has said is comfortable for producers, consumers and investors.
Signs of China’s economic recovery added to the supportive backdrop for prices. Profits at Chinese industrial companies returned to growth in January through November, offering clear evidence of a stronger recovery for the country’s businesses.
U.S. stocks dipped on Monday as airline shares faltered amid security worries, while losses were limited by retail shopping data indicating improved consumer spending.
Reporting by Alex Lawler in London, Matthew Robinson and Robert Gibbons in New York; Osamu Tsukimori in Tokyo; Editing by Marguerita Choy
Our Standards: The Thomson Reuters Trust Principles.