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Oil Rallies As U.S. Northeast Prepares for Cold Snap COMMODITIES MARKETPLACE By Bloomberg

Posted on: Tuesday, 6 December 2005, 18:00 CST

By Mark Shenk

The price of crude oil and heating oil surged Monday as freezing temperatures gripped the midwestern United States and the first snowstorm reached the Northeast, spurring demand for heating fuels. Temperatures are expected to fall to 21 degrees Fahrenheit, or minus 6 degrees Celsius, in New York by Friday, according to Meteorlogix, a provider of commercial weather services based in Lexington, Massachusetts. Prices dropped last month as unseasonably warm weather reduced demand for heating oil and natural gas.

"It's cold enough to make a difference," said Bill O'Grady, an analyst with A.G. Edwards in St. Louis, Missouri. "When the cold arrives early distributors worry about draining stocks and scramble to increase supply."

On the New York Mercantile Exchange, crude oil for January delivery closed up 59 cents at $59.91 a barrel. Prices have fallen 15 percent since touching a record $70.85 a barrel on Aug. 30, the day after Hurricane Katrina struck the U.S. Gulf Coast. Heating oil for January delivery rose 1.76 cents to $1.7896 a gallon in New York. Heating oil reached a record $2.21 on Sept. 1.

"Temperatures in the Northeast will be below normal for the next seven to eight days," said Joel Burgio, a forecaster for Meteorlogix. "The coldest days will be Thursday and Friday."

The price of gold in New York rose for a fourth straight session, extending a 22-year high, as investors sought alternatives to investments in stocks, bonds and currencies. Gold for February delivery rose $5.60 to $512.60 an ounce on the Comex, a division of the New York Mercantile Exchange.

Copper prices rose in New York, resuming a yearlong rally amid expectations that mining companies would not be able to increase production fast enough to meet rising global demand. With demand set to outpace supply by 145,000 tons this year, Citigroup reported that copper could exceed $2.50 a pound and raised its 2005 fourth- quarter price forecast by 9.7 percent. Copper for delivery in three months rose 2.65 cents to $2.0075 a pound on Comex.

Source: International Herald Tribune

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