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Brent futures traded near $108 a barrel today, drawing support from a steep fall in the last week’s distillate stocks in the US as bitter cold boosts demand for heating oil.

Brent crude fell by six cents to $107.79 a barrel, while US oil was up by nine cents to $97.45, reported Reuters.

Crude gained after the US Energy Information Administration (EIA) data revealed that the stocks of distillates fell by 4.6 million barrels last week, more than double what was expected.

During the week ended 24 January, the distillate inventories were 116 million barrels nationwide. On the east coast, which has suffered two cold snaps this month, distillate stocks dropped by 3.8 million barrels to 29.5 million barrels, the lowest since April 2008.

The prices also received support from growing concerns over supply disruptions in Libya, as the North African country’s deputy prime minister survived unharmed after gunmen fired on his car in Tripoli on Wednesday.

"Brent crude fell by six cents to $107.79 a barrel, while US oil was up by nine cents to $97.45, reported Reuters."

But currently the crude prices are under pressure as the HSBC purchasing managers’ index showed Chinese manufacturing activity fell to a six-month low in January, with a reading of 49.6, down from December’s 50.5.

On Wednesday, the Federal Reserve decided to trim its bond purchases by another $10bn as it plans to wind down its economic stimulus despite recent turmoil in emerging markets.

This pullback in stimulus will strengthen the dollar, making commodities more expensive including oil.


Image: Bitter cold across the northern Hemisphere boosted heating oil demand. Photo: courtesy of m_bartosch.

Energy