Oil Prices Up on Winter Weather Concerns

LONDON – Crude oil futures edged up Wednesday amid expectations that cold weather in the U.S. Northeast will boost demand for heating fuels.

Light, sweet crude for January delivery on the New York Mercantile Exchange rose 39 cents to $60.33 a barrel in electronic trading by midday in Europe. January Brent at London’s ICE Futures gained 55 cents to $58.16 a barrel.

Heating oil edged up to $1.7725 a gallon while gasoline rose more than a cent to $1.5971 a gallon. Natural gas increased nearly 23 cents to $13.718 per 1,000 cubic feet.

While cold weather in the United States is expected to raise demand for heating fuel, increased production and sufficient imports could prevent a big spike in prices for now, analysts said.

Traders were also awaiting the midweek U.S. petroleum inventory report, expected to show rises in distillate and gasoline stocks as refineries revved up production in anticipation of more wintry weather.

According to a Dow Jones survey of analysts, distillate inventories were expected to gain 1.13 million barrels in the week that ended Dec. 2, while gasoline would be up 1.16 million barrels.

Analysts also expected the boost in refinery runs to burn through more crude oil stocks, causing commercial petroleum inventories to slide for a second straight week, dropping by an estimated 950,000 barrels.

Production facilities on the U.S. Gulf Coast have partly recovered from damage earlier this year by Hurricanes Katrina and Rita, but still have a long way to go, Energy Intelligence said on its Web site.

“The recovery in production has been particularly significant in recent days and weeks, but a substantial volume of supply – about a quarter of the gas and a third of the oil – is still off, underscoring the severe damage from this year’s hurricanes,” the group said.