Oil prices are at a two-week high on the cold weather snap in the US Northeast and lower-than-average distillate stocks.

U.S. light crude reached an intraday peak at $44.55 a barrel, to ease to $44.36 later.

The heating oil stocks are still 13% below the average annual level, and a US government report shows a decline of 100,000 barrels last week, bringing supplies down to 49.9 million barrels. The drop comes against the background of a 7% rise in demand for heating oil caused by colder-than-usual temperatures.

``Temperatures in the Northeast today will be 6-to-10 degrees below normal, the coldest days so far this season,’’ Michael Palmerino, a forecaster at Meteorlogix LLC in Woburn, Massachusetts, said yesterday. ``A winter storm should come through late Sunday and Monday and you will see heating demand go up, especially if the precipitation falls as snow.’’

"The market has been expecting heating oil stocks to build, but they haven’t risen and with the cold weather people are starting to feel uncomfortable," said Tony Nunan at Mitsubishi Corp. in Tokyo. "If the weather stays cold, we could see a return to $50."

Crude supplies have also been declining, according to the Energy Information Administration (EIA) data, with a 100,000-barrel drop to 293.8 million barrels in the past week.

"However modest, this was the first draw in crude inventories following 11 straight weeks of builds," said Merrill Lynch.