Oil hits 4-week high above USD 78

Oil has risen some 13 per cent from a 2-1/2-month low below 70 a barrel two weeks ago,after government data showed large consecutive declines in US crude and distillate inventories amid a colder winter.

The latest National Weather Service six to 10-day outlook issued on Monday gave below-normal readings for the US Northeast,the biggest heating oil market in the world.

Tomokazu Amano,an analyst at Mitsubishi Corp Futures amp; Securities in Tokyo,said that last week8217;s data showing a large draw down in US crude inventories amid signs of economic recovery was providing support.

8220;Although there is a technical strength,the market is also cautious because last week8217;s gains occurred amid thin trading,8221; he said. 8220;The market is getting support as a cold wave in the US Northeast is projected to boost demand.8221;

The dollar rose against the yen and held near a recent high on the euro on Monday,helped by demand from Japanese corporates before the year-end,with eyes on US data and Treasury auctions to see if it can maintain the rally.

Some Asian markets were closed on Monday,but Japan8217;s Nikkei average rose to its highest in four months as exporters climbed helped by stable currency moves.

Wall Street is seen likely to make a strong showing in the final week of 2009 as bulls gear up to toast the first annual advance for US stocks in two years on hopes of more economic stability in 2010.

Oil prices are stabilising and could even rise 8220;reasonably8221;,Saudi Arabia8217;s King Abdullah was quoted as saying by a Kuwaiti newspaper.

The top OPEC oil exporter sees a fair oil price at between 75 and 80 per barrel,King Abdullah told the daily al-Seyassah.

Russia has scrapped January oil exports via Ukrainian ports and also said it fears Ukraine will have problems paying for its gas,a sign of a possible repeat of New Year gas rows which have in the past led to supply cuts in Europe.