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Oil Prices Hover Above $64 a Barrel

Posted on: Monday, 9 January 2006, 06:00 CST

VIENNA, Austria - Oil prices rose Monday, hovering above $64 a barrel, and natural-gas futures dropped amid a mild start to winter in the United States.

Gasoline prices also eased but analysts suggested that relatively mild U.S. temperatures would keep demand high and stocks tight.

Light, sweet crude for February delivery rose 19 cents to $64.40 a barrel on the New York Mercantile Exchange by midday in Europe. The contract gained $1.42 to settle at $64.21 on Friday.

Brent crude climbed by 15 cents to $62.87 on London's ICE Futures exchange.

Heating oil declined slightly to $1.7960 a gallon. Gasoline fell by nearly a penny to $1.8061 a gallon. But Vienna's PVM Oil Associates suggested prices would gain soon, saying that "with warmer weather forces at least in the short- to medium-term - perhaps the next two weeks - gasoline is expected to stay in the spotlight."

Crude prices had earlier in the day fallen to a low of $63.96, which some analysts said was likely a correction of the previous week's sharp rise as the market remained amply supplied with crude.

But the outlook remained bullish, boosted by recent threats to supply, such as the natural-gas dispute between Russia and Ukraine, in which Russia cut pipeline runs, raising fears about the stability of global supplies. Russia and Ukraine reached agreement to end their gas dispute.

"We can expect an overall high floor in prices this week," said energy analyst Victor Shum with Purvin & Gertz in Singapore.

Analysts have said investors and speculators were pouring money into the market out of faith that demand will keep rising and that the possibility of energy supply disruptions from Iraq and Nigeria won't soon fade.

"The hedge funds and speculators are quite gung-ho about the market so far this year," Shum said. "Because threats of supply disruption will continue to be there and provide another year of volatility."

Natural gas futures lost 13 cents to $9.64 per 1,000 cubic feet, as a mild start to winter in the United States continued to keep prices under pressure, though the front-month contract hit a peak of $15.78 on Dec. 13.

Source: Associated Press/AP Online

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