Oil Prices Storm Past $58 Per Barrel
By CHRISTOPHER WANG
NEW YORK – Oil prices climbed past $58 a barrel Tuesday as the early arrival of a winter storm in the Northeast raised concerns about increased heating oil demand over the next few weeks.
Crude futures saw a second day of gains after sliding to five-month lows last week, though prices are still about 20 percent above year-ago levels. A barrel of light, sweet crude for January delivery added $1.05 to $58.75 on the New York Mercantile Exchange.
Other Nymex prices also advanced, with heating oil rising 4.1 cents to $1.750 per gallon, natural gas up 16.9 cents at $11.50 per 1,000 cubic feet and gasoline adding a penny to $1.47 per gallon.
January Brent on London’s ICE Futures exchange rose 80 cents to $56.15 a barrel.
Oil prices have been dictated recently by weather patterns in the northeastern United States, which consumes about three-quarters of the country’s heating oil, making it the world’s biggest market for that type of fuel. Forecasts for a snowstorm during the busy Thanksgiving weekend sparked this week’s rise in prices.
AccuWeather had predicted the storm’s arrival later this week, but meteorologists now say the cold front will bring a mix of rain and snow from North Carolina to Maine by Tuesday. Up to a foot of snow is expected in parts of Vermont and New Hampshire, according to AccuWeather meteorologist Brian Lovern.
Unusually mild weather in that region in early November depressed prices, but now that winter is setting in, analysts are already saying crude has bottomed out after hitting a five-month low last week.
"With another blast of cold weather headed to us this week, we may have seen the lows," said Phil Flynn, an analyst with Alaron Trading Corp. in Chicago.
Vienna’s PVM Oil Associates estimated that demand for heating oil in the United States would jump by about 7 percent above normal levels in key consuming regions this week.
For further clues on the direction of oil prices, the market also was awaiting the release of weekly U.S. petroleum inventory data on Wednesday.
A survey of analysts by Dow Jones Newswires was mixed, with five predicting crude stocks increases and four saying there would be a fall. Distillate stocks, which include heating oil, jet fuel and diesel, are likely to rise, the analysts said.
The London-based Center for Global Energy Studies warned of low distillate stocks in the United States after production was battered from hurricanes Katrina and Rita before refineries normally begin boosting output before winter.
"Distillate output has suffered most from the refinery shutdowns, falling by 600,000 barrels per day from peak summer levels," CGES said. "Imports have only made small inroads upon this supply gap…Stocks are now close to the bottom of the seasonal range."
—
Associated Press writers En-Lai Yeoh in Singapore and George Jahn in Vienna, Austria, contributed to this report.