Oil Rises On Gasoline, Heating Fuel Demand
NEW YORK, Jan 17 (Reuters) - Demand for heating fuels and rising gasoline prices drove oil higher on Friday, but gains were limited by a stronger dollar and expectations for increased supply from Libya and Iran.
U.S. heating oil and gasoline futures both climbed more than 1 percent on higher demand as the U.S. prepares for another cold snap and as traders bought contracts to cover short positions in heating oil.
The spread between the European and U.S. crude oil futures benchmarks contracted to its narrowest point since the start of the new year due to the start-up of a major U.S. pipeline, which is expected to bring more oil to refining markets.
"The Gulf Coast ULSD (heating oil) contract is showing more strength because its underlying fundamentals are tighter than gasoline," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. "We have forecast for cold weather, and we know we are going to see more export demand in the coming months."
Brent oil for March delivery settled up 73 cents at$106.48 a barrel, rebounding from the two-month low of $105.44 it hit earlier in the day. U.S. crude settled at a two-week high, up 41 cents at $94.37 a barrel, reversing two weeks of losses.
Floor trading will be closed on Monday and there will be no settlement on the New York Mercantile Exchange due to the Martin Luther King, Jr. Day holiday.
Brent prices have fallen almost 10 percent since August on expectations for increased supply from Libya and Iran. The European benchmark's premium to U.S. oil ended the session at $11.89, the narrowest since Dec. 20 when it reached $11.86.
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