Oil gains on weak dollar

19/02/2009

The decline in the strength of the dollar against the euro has helped to push crude prices up for the first time this week.

By 6:27 Eastern Time today (February 19th), light sweet crude for March delivery was trading at $35.70 (£24.82) a barrel on the New York Mercantile Exchange (Nymex), up $1.08 since the start of electronic trading.

The gains come despite weak demand data published yesterday by the Energy Information Administration (EIA) and have been attributed to the poor performance of the greenback against the euro.

Eugen Weinberg, Commerzbank analyst in Frankfurt, told Bloomberg: "The most important reason today is the dollar is showing some weakness against the euro. There will always be a link between the two."

Heating oil also made gains on the Nymex, with the March delivery contract hitting $1.1680 a gallon, up 2.11 cents.

The EIA figures yesterday showed that despite a rise in crude, DERV and gasoline stockpiles, heating oil reserves shrunk last week.

However, heating oil reserves are still at the high end of expected levels for this time of year, indicating weak demand.