Oil prices hit new 2014 peaks

LONDON (AFP) - The oil market struck the highest level so far this year on Wednesday on the back of US winter weather and geopolitical tensions, but trimmed gains on poor housing data.

New York's main contract West Texas Intermediate (WTI) for delivery in March surged to a four-month high at US$103.34 (S$130.32) a barrel. It later stood at US$102.82, up 39 cents from Tuesday.

Brent North Sea crude for April rallied to US$110.82, its highest point since the start of 2014.

The contract later pulled back to S$110.38 in early afternoon London deals, down eight cents.

"WTI crude oil momentarily came under a bit of pressure in the aftermath of some shocking housing data from the US," said analyst Fawad Razaqzada at trading site Forex.com.

He added: "However the US oil contract managed to claw back some of its losses, apparently as investors once again blamed the cold weather for this latest data miss." US data showed an unexpectedly big decline in new home construction and building permits in January.

Housing starts in the US sank 16.0 per cent from December to a seasonally adjusted annual rate of 880,000, the Commerce Department said, well below analyst forecasts of 963,000.

Building permits dropped 5.4 per cent to 937,000, below the 980,000 forecast.

Analysts have somewhat downplayed economic data for December and January, believing that unusually cold weather in much of the US has depressed economic activity.

The oil market was buoyed Wednesday by hopes of strong heating fuel demand in the winter-struck United States, alongside simmering tensions in Africa and Venezuela.

"Brent crude held above US$110 a barrel, underpinned by geopolitical concerns in Africa and Venezuela, while US oil touched its highest in four months as stockpiles are forecast to fall on winter demand and new pipeline capacity," wrote Investec oil analysts in a note to clients.

Crude futures had also surged on Tuesday with cold weather in the United States pushing demand for heating fuel higher.

"US oil prices these continue to remain well supported despite yet more disappointing economic data," added CMC Markets analyst Michael Hewson.

"News of another snow storm set to hit the north eastern seaboard has helped keep a floor under prices as the cold weather in the US continues to show no signs of abating." The United States is currently enduring an especially bitter winter, with the midwestern and southern states experiencing unusually low temperatures.

While milder weather is forecast this week in some US cities, meteorologists expect another wintry blast after that.