Page last updated at 21:39 GMT, Monday, 28 December 2009

Oil price rise nears $80 a barrel

Traders work on the floor of the New York Mercantile Exchange
Oil is the world's most heavily traded commodity

Oil prices have climbed to more than $79 a barrel, reaching the highest levels for five weeks.

During Monday's trading in London, US crude touched $79.12 a barrel before falling back later to $78.77.

Heating oil futures led the gains, while London Brent crude rose by more than a dollar to $77.32 a barrel.

Prices rose following forecasts of colder weather in the United States, and the expectation of increased consumption and falling reserves.

That would indicate that demand was rising and signal an improvement in the US economy.

The north-east of the US is also the world's largest heating oil market.

On Thursday last week, benchmark crude rose $1.38 to settle at $78.05. Oil markets were closed on Friday for Christmas.

Falling supplies?

Inventory figures detailing the amount of oil held in stock are expected later this week from the Energy Information Administration.

News of low stock levels could push oil prices above $80 a barrel by the end of the year, according to Clarence Chu, a trader with Hudson Capital Energy in Singapore.

Better employment figures in the US last week also helped to lift hopes of economic recovery and raised expectations of stronger consumer spending and oil consumption.

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