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Oil rises above $83 amid strong Chinese demand
Oil rises above $83 in Europe on signs of strong Chinese crude demand, weaker dollar


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{"s" : "cvx","k" : "c10,l10,p20,t10","o" : "","j" : ""} By Pablo Gorondi, Associated Press Writer , On Monday January 11, 2010, 8:22 am
Oil prices jumped above $83 a barrel Monday amid signs of strong Chinese demand for crude, a weakening U.S. dollar and a strong flow of speculative funds into commodities.

By early afternoon in Europe, benchmark crude for February delivery was up $1.09 to $83.84 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 9 cents to settle at $82.75.

China said Sunday that oil imports rose 14 percent last year to a record high in December, part of a 56 percent surge in overall imports last month. The better than expected Chinese figures helped investors brush off Friday's disappointing U.S. jobless report, which showed the economy lost 85,000 jobs in December and the unemployment rate was steady at 10 percent.

A weaker dollar also helped boost oil prices, as investors buy commodities as a hedge against inflation while crude priced in dollars becomes cheaper in other currencies.

The euro rose to $1.4522 on Monday from $1.4430 on Friday while the British pound advanced to $1.6163 from $1.6032 and the dollar fell to 92.39 Japanese yen from 92.64 yen.

Crude prices have spiked 20 percent in the last month as a rash of cold winter weather in parts of the U.S., Europe and Asia boost demand for oil products such as heating oil.

Amplifying the effects of the frigid climate was a surge into commodities of speculative money with little regard for the basics of supply and demand.

"Investors might be overvaluing and thereby multiplying the impact of cold temperatures," said JBC Energy in Vienna. "To make a significant impact the chilly weather will have to remain with us for months and not weeks."

Analysts at Britain's KBC Market Services said that rising oil prices were the result of speculative decisions, not market fundamentals.

"If prices continue to rise next week, it will be tempting to conclude that we are back in the casino-like oil market conditions we saw in 2008," KBC said in a report. Oil hit a record high of $147 a barrel in July 2008.

Supplies were threatened in Nigeria, where unidentified gunmen attacked a Chevron Corp. crude oil pipeline, cutting production by 20,000 barrels a day, a company spokesman said Saturday.

"While this highlights that Nigeria is still a volatile environment, we are not back to the previous scheme of militancy," said Olivier Jakob of Petromatrix in Switzerland.

In other Nymex trading in February contracts, heating oil rose 2.66 cents to $2.2269 a gallon and gasoline gained 3.58 cents to $2.1911 a gallon. Natural gas futures were down 19.1 cents to $5.558 per 1,000 cubic feet.

In London, Brent crude for February delivery rose 99 cents to $82.32 a barrel on the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.