Oil hits highest level in more than two years

Source: Globe & Mail, Dec 22, 2010

Oil (CL-FT90.620.800.89%) jumped above $90 (U.S.) a barrel Wednesday to settle at that level for the first time in 26 months, as a third straight weekly drop in U.S. crude inventories and cold weather spurred pre-holiday buying.

U.S. crude stockpiles fell 5.3 million barrels last week, bringing the past three weeks’ declines to 19 million barrels, roughly equivalent to one day of U.S. fuel consumption. It marked the biggest three-week drop since 1998.

Companies have drawn down inventories for year-end accounting purposes, analysts said.

U.S. data showed the economy picked up in the third quarter, signaling a more solid pace of recovery and improving oil demand prospects.

A Reuters poll released Wednesday showed a surge in fuel demand in the fourth quarter sent 2010 demand growth to near record levels, adding support to prices in recent weeks, with further increases expected in 2011 as the economy improves.

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