MercoPress. South Atlantic News Agency

Oil prices shoot above US$ 45.

Oil prices shot up five percent yesterday and closed above US$ 45 a barrel after an early spurt of buying created momentum that forced investors anticipating lower prices to cover their bets

Analysts said there was no single spark that got the rally going. Instead, they suggested that the move higher merely signals the persistent skittishness in the market, stemming from strong demand, tight supplies and fears about instability in Iraq, Saudi Arabia, Nigeria and other key producing nations.

??Not a lot has changed from when we were US$ 10 a barrel higher than where we are now,'' said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York. ??And heating oil inventories are still on the low side,'' he added. ??At some point, the weather is going to get colder.''

Light sweet crude for February delivery soared US$ 2.17 to settle at US$ 45.56 a barrel on the New York Mercantile Exchange. February heating oil futures surged 6.29 cents to US$ 1.2813 per gallon, while February gasoline ended 5.19 cents higher at US$ 1.2229 a gallon.

In London, Brent crude for February delivery rose US$ 2.34 to US$ 42.85 per barrel on the International Petroleum Exchange.On Wednesday, oil prices fell after a US government report showed larger-than-expected increases in winter fuel supplies, sending heating oil prices lower too.

The US Energy Department's statistical arm reported Wednesday that supplies of distillate fuel, which include heating oil and diesel, grew by 2 million barrels last week to 121.1 million barrels. The increase was much higher than expected, though it still leaves inventories 11 percent below year ago levels, according to the Energy Information Administration.

High-sulfur distillates used for heating oil increased by 1.2 million barrels to 50.1 million barrels, about 9 percent below year ago levels.

While oil prices are well below the late October high above US$ 55 a barrel, traders remain wary about tight heating oil supplies in the United States and about possible supply disruptions in Iraq and terrorist activity in Saudi Arabia, the world's top supplier of crude oil.

Markets were rattled throughout 2004 by stronger-than-expected demand and persistent supply fears and unrest in key producers Saudi Arabia, Russia, Venezuela, Nigeria and Iraq.

US and Norwegian producers have also been working to restore production caused by leaks and storms.