NEW YORK (CNN/Money) -
Oil prices jumped 5 percent Thursday as fund-buying and a rally in heating oil reversed two weeks losses that had been triggered by a stretch of mild U.S. winter weather.
Light crude for February delivery jumped $2.17 to $45.56 a barrel on the New York Mercantile Exchange, bringing it back to the top of the trading range it's been in since late last year.
In London, Brent crude for February delivery settled $2.34 higher at $42.85 a barrel.
There was considerable resistance at the $44 a barrel level, but that once that was surpassed, prices moved higher quickly, James Cordier, president of Liberty Trading Group in St. Petersburg, Fla., told Reuters
The 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.
On Thursday, more than a foot of snow fell in some areas of the Midwest while in the Northeast, a few inches of snowfall was followed by sleet and freezing rain, which helped spark Thursday's rally.
Analysts explained the surge in prices as a sign that the market was sensing some vulnerability.
"The market is showing you that there is still a bullish undertow despite the fact that crude inventories are solid," Phil Flynn of Alaron Trading told CNN/Money.
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Higher oil prices hurt most sectors because they tend to dampen consumer spending and act like a tax on businesses.
But oil stocks climbed on the news of higher prices.
"Oil is strong and that is helping oil companies, but it is surprising the broader market is as strong as it is, given higher oil prices," Mike Driscoll, managing director at Bear Stearns, told Reuters.
Blue-chip stocks rose Thursday after falling in the first three sessions of the new year. The Dow Jones industrial added about 25 points while the Nasdaq composite index ended little changed.
-- Reuters contributed to the story
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