LONDON, Dec 19: The price of oil scaled $20 a barrel Wednesday to hit its highest level for two weeks, amid signs of tightness in the US market for crude-based products, analysts said.

Prices topped 20 dollars a barrel in New York and rode up close to the threshold in London, as dealers noted a drop in US inventories and bet that a deal by producers to cut output would be implemented in the new year.

Brent North Sea crude for February delivery rose as high as $19.76 a barrel at one point, up 58 cents, while the New York January light sweet crude contract also rose 58 cents to $20.18.

The market was kept jittery meanwhile by an incident in which Iran accused US naval forces of intercepting an Iranian oil tanker in the Gulf and injuring two seamen.

Analysts said that technically the market is oversold at the moment and that participants hence need few excuses to buy back positions.

Data from the US energy department showing a sharp fall in distillate fuel stocks suggested that some demand may at last be filtering through to the market after an autumn slump, analysts said.

“The interesting thing here is that it’s the first major decline in distillates we have had in a while,” noted Commerzbank analyst Doug Leggate. “The numbers are quite supportive for the oil price.”

He said the market was still reckoning on a deal between the Organization of Petroleum Exporting Countries (Opec) and its rivals to cut output early next year.—AFP