Oil Prices Approaching Two-Year Highs

Demand for heating fuel and growth in U.S. GDP spur trading frenzy.

Oil prices traded close to recent two-year highs on Thursday, as traders continued to absorb news that U.S. crude reserves fell by more than double market expectations last week.

Brent North Sea crude for delivery in February rose eight cents to $93.73 per barrel after soaring on Wednesday to $93.94 dollars, a level last seen in early October 2008.

New Yorks main contract, light sweet crude for February, gained 10 cents to $90.58 on Thursday, after touching a similar peak of $90.80 the previous day.

The market spiked higher on Wednesday following news of plunging U.S. crude reserves as demand in the worlds biggest oil-consuming nation rises.

Investor sentiment was also spurred by cold weather, which increases demand for heating fuel, and a modest increase in U.S. gross domestic product data.

Oil prices were higher again as several factors, including cold weather in the U.S., a large decline in crude stocks and higher revised third-quarter U.S. GDP, contributed to strength in the market, said Westhouse Securities analyst David Hart.

Gasoline (petrol) reserves rose 2.4 million barrels, much more than market expectations for a gain of 900,000 barrels.

Officials on Wednesday revised up the rate of U.S. economic growth in the third quarter to 2.6% from a previous estimate of 2.5%, pointing to an improving U.S. recovery.

The news cheered crude markets as a pick-up in the battered American economy would spark greater demand for energy.

Crude prices rose following the stronger than expected U.S. GDP figures and a sharper-than-forecast 5.3 million barrel slide in U.S. crude oil inventories, the Commonwealth Bank of Australia (CBA) said in a report.

Copyright Agence France-Presse, 2010

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