Oil closes in on $79 in Asia after big surge

[December 29, 2009]  BANGKOK (AP) -- Oil prices closed in on $79 a barrel Tuesday in Asia, extending gains as regional stock markets mostly rose and the dollar's rally stalled.

Benchmark crude for February delivery was up 2 cents to $78.79 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange.

The contract settled up 72 cents at $78.77 on Monday after surging above $79 as an extended cold snap in the U.S. triggered an end-of-year rally in energy futures.

Futures contracts for oil, natural gas and heating oil have all become more expensive this month as snow storms blanketed parts of the U.S. and a sharp drop in supplies of crude and other fuels surprised traders.

Analysts say oil could rise above $80 before the end of the year if U.S. inventories later this week show a drop in stockpiles, which would suggest improving demand in the world's largest economy.

Providing a positive cue for oil in Asia was mild gains in stock markets -- sometimes a barometer for oil traders of confidence in the economy -- and the dollar's rally stalling. Oil, which is traded in dollars, often moves in the opposite direction to the currency.

In late afternoon Asian trade, the euro rose to $1.4426 from $1.4376 in New York late Monday. The dollar fell to 91.56 yen from 91.62 yen.

In other Nymex trading in January contracts, heating oil climbed 1 cent to $2.08 gallon while gasoline added 0.7 cent to $2.026 a gallon. Natural gas fell by 1.8 cents to $5.972 per 1,000 cubic feet.

In London, Brent crude for February delivery rose 17 cents to $77.49 a barrel on the ICE Futures exchange.

[Associated Press]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.