•Crude futures rallied higher in European morning trading on Friday, extending late Thursday's gains which were led mainly by a strengthening in heating oil futures due to expected colder temperatures along the US Atlantic coast, sources said.

•The bullish weather outlook spurred some short-covering ahead of the weekend, as market players were buying back position, underpinning the whole petroleum futures complex. Moreover, a rebound in US equity markets late Thursday despite a stronger US dollar also supported crude futures. "The market is dominated by a bit of cold weather influence today, heating oil was the driver on Thursday...people are buying back positions as some short-covering is going on," a London-based broker said.

•Record-breaking warm temperatures on the US Atlantic Coast on Wednesday were replaced by more seasonal weather Thursday, and very cold thermometer readings were forecast to arrive in the region over the weekend. More seasonal weather could portend a pick-up in distillate demand, which has been soggy given the lack of cold-enough temperatures to cause a draw on heating oil stocks, sources said.

Updated: February 8, 2008