Oil climbs as Russia halts Belarus supply

OIL rose to $81 (R596) a barrel yesterday, the highest in more than two months, on news that Russia has halted oil supplies to Belarus and on cold weather in the US.

OIL rose to $81 (R596) a barrel yesterday, the highest in more than two months, on news that Russia has halted oil supplies to Belarus and on cold weather in the US.

Russia halted oil supplies to Belarussian refineries after failing to agree on terms for 2010, traders said on Sunday.

Russian oil was flowing normally to European Union customers via Belarus on Monday, the Belarus state oil firm said.

"There's no scarcity (of oil). On the physical scale, it does not have any impact on the market, but psychologically this is very important news. Volumes are relatively thin," said Commerzbank oil analyst Eugen Weinberg.

US crude for February delivery rose $1,49 to $80,85 a barrel after touching $81,16, the highest since October 26. Brent crude climbed $1,56 to $79,49 a barrel. The bullish news and hopes for recovery in the US economy allowed the oil market to continue the run that lifted prices by 78percent last year.

Other commodities also rose on Monday, helped by the weakening dollar. Gold rose 2percent and base metals prices also advanced, with copper hitting a six-month high.

Weakness in the US currency boosts gold's appeal as an alternative asset, and makes dollar-priced commodities such as oil cheaper for other currency holders. - Reuters

X