Oil traded near its highest price in more than two years in New York as temperatures fell and storms blanketed snow across the eastern U.S., increasing demand for heating fuel. New York City may get as much as 20 inches (51 centimeters) of snow by tonight with temperatures dropping as low as 22 degrees Fahrenheit (minus 6 Celsius), according to weather forecaster AccuWeather. The People’s Bank of China boosted benchmark one-year lending and deposit rates on Dec. 25 for the second time since October. “Currently it seems the focus is on cold weather in Europe and the northeast U.S,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “The Chinese rate hike had some effect.” Crude for February delivery traded at $91.49 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 9:10 a.m. London time. The contract earlier rose as much as 37 cents, or 0.4 percent, to $91.88 a barrel, the highest price since Oct. 7, 2008. Brent crude for February settlement was up 34 cents at $94.11 a barrel on the ICE Futures Europe exchange London after rising as high as $94.52. Futures in New York climbed 4 percent last week. Floor trading was closed Dec. 24 for the Christmas holiday. Heating oil rose as much as 0.9 cent to $2.5498 a gallon in New York, the fifth straight daily increase. Most U.S. heating oil is consumed in the northeast. Bad Weather Oil, which rallied 78 percent in 2009, has gained 16 percent this year as the global economic recovery bolstered demand, reducing supplies held in storage. “Crude oil came under pressure due to what happened in China but the bad weather on the east coast is causing traders to think demand will increase,” said Jonathan Barratt, managing director of Commodity Broking Services in Sydney. Crude inventories in the U.S. dropped 5.33 million barrels to 340.7 million even as imports increased, the Energy Department said Dec. 22 in its weekly report. Stockpiles have decreased so far this month by 19 million barrels, or 5.3 percent, the most since December 2006. “Despite the two or three draws we have had, inventories are still above average,” said Tobias Merath, head of commodities at Credit Suisse Group in Zurich. “When we move into mid-January and early February, the risk is that oil prices could fall again, not by a lot, but into the 80s.” Sixteen of 30 analysts and traders, or 53 percent, forecast oil prices will rise this week as supplies decline further, the Bloomberg News survey showed. Eight respondents, or 27 percent, predicted crude will fall and six estimated there will be little change. Last week, 53 percent of survey respondents said the market would drop. To contact the reporter on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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