- The Washington Times - Friday, February 9, 2007

NEW YORK (AP) — Oil prices climbed briefly above $60 a barrel yesterday for the first time since the first trading day of the year, as the unrelenting chill throughout the United States led traders to think that heating fuel demand won’t be letting up anytime soon.

Also boosting prices was growing tension between Iran and the United States, as well as further signs that Organization of Petroleum Exporting Countries members are following through with the oil cartel’s planned production cuts.

Prices failed, however, to settle above the $60-a-barrel mark — a psychological barrier that the market has flirted with all week, after erasing the big drops made in January that momentarily brought prices below $50 a barrel.

Light, sweet crude for March delivery rose 18 cents to settle at $59.89 a barrel by afternoon trading on the New York Mercantile Exchange, after rising as high as $60.80 and spurring some traders to take profits.

Before yesterday, crude oil had come close to, but hadn’t traded above $60 a barrel on the Nymex since Jan. 3. On Thursday, the contract jumped $2 to settle at $59.71 a barrel.

The biggest market driver recently has been the weather, which last week depleted U.S. supplies of distillate fuels, which include heating oil, by the largest amount since December 2005, noted Peter Beutel of Cameron Hanover. With temperatures still below normal across the Northeast United States, which consumes 80 percent of the nation’s heating oil, traders are bracing for the U.S. government inventory data on Wednesday to show an even bigger decrease.

“It’s remained cold and blustery through the week,” Mr. Beutel said. “I think some traders today thought, what could next week bring in the report?”

“After two or three failures, and then getting above it, that’s important in determining market direction,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill. He said, though, it’s too soon to say whether the market is firmly entrenched in an uptrend, especially with the end of winter heating fuel demand on the horizon: “It just looks like we’ve got another week or two of strength.”

The Brent crude contract for March slipped 2 cents to settle at $59.01 a barrel on the London ICE Futures exchange.

Yesterday, National Nigeria Petroleum Corp. said it will cut crude loading volumes for February and declared a “force majeure” on cargoes, according to Dow Jones Newswires. The reduction followed a Thursday report by Lloyds’ marine intelligence unit that OPEC in January reduced crude oil exports by 200,000 barrels a day — convincing some skeptical traders that the cartel is complying, at least gradually, with the production cuts it announced late last year.

Also buoying oil prices, Iran on Thursday stepped up its warnings to the United States, which rekindled worries that supplies out of the oil producer could be hindered. Iranian supreme leader, Ayatollah Ali Khamenei, said Tehran would strike U.S. interests around the world if his country is attacked.

And giving prices an extra boost was news of a shutdown at an Occidental Petroleum Corp. crude and natural gas field in California, as well as violence in Nigeria, where a Frenchman was kidnapped Thursday in the latest of a spate of violence targeting oil workers.

More than 100 foreigners have been seized in a year of stepped-up attacks across Nigeria’s southern region, where the crude is pumped. More than 40 have been seized in the past month alone. The violence in Africa’s biggest oil producer has cut daily output by nearly a quarter.

In other Nymex trading, natural gas fell 4.4 cents to settle at $7.827 per 1,000 cubic feet.

Natural gas, the more popular form of home heating in the United States, has risen more than 60 percent over the past month on the recent cold weather. The National Oceanic and Atmospheric Administration continues to forecast normal to below-normal temperatures across the United States until at least Feb. 22.

Nymex heating oil futures rose less than a cent to settle at $1.7251 a gallon, while gasoline futures rose 2.15 cents to settle at $1.6148 a gallon.

Retail gasoline prices have been rising along with crude prices over the past two weeks. The average U.S. price of a gallon of regular was $2.205 on Friday, up from $2.197 on Thursday and January’s low of about $2.16.



Click to Read More

Click to Hide