Currency markets again played a key role in the direction of oil prices during the week ended 4 March as the US’ benchmark crude contract hit the highest level since January.

The April West Texas Intermediate (WTI) contract was trading at $80.30 a barrel on 4 March, up $0.73 from a week before. The contract topped $81 a barrel on 3 March, the highest price since January (MEED 25:2:10).

The European April Brent contract was trading at $78.80 a barrel at the same time, up $1.04 from a week earlier. It also hit a seven-week high, of $79.25 a barrel, on 3 March.

The last average price available for the oil cartel Opec’s basket of 12 crudes was $75.51 a barrel from 2 March, stable from a week before.

The rise in Brent and WTI prices came despite the release of a report by the US’ Energy Information Administration (EIA) that showed a rise in crude oil stocks in the country. The EIA’s statistics often lead price movements, with higher inventories depressing prices and a fall in stocks pushing values up.

Crude oil inventories rose by 4.1 million barrels to 341.6 million barrels during the week ended 26 February. Stocks of gasoline also increased, by 700,000 barrels to 231.9 barrels.

Analysts attribute the spike in prices to continued confidence that crude oil demand will grow in 2010 and to continuing fluctuations in currency markets. Because oil is traded exclusively in US dollars, a weakening in the currency can push prices up while an appreciation in its value pushes prices down.

The euro rebounded on 3 March as Greece announced new austerity measures. The currency had weakened in previous weeks over concerns that the Eurozone member would struggle to service its debts.

The euro increased to $1.372 on 3 March, up from $1.360 the day before and $1.34 on 25 February, raising oil prices.

It slid back to $1.366 on 4 March, causing oil prices to ease.