Crude oil climbs on U.S. snowstorm warnings
NEW YORK – A winter storm forecast for the Northeast lifted energy prices Monday and fueled speculation about whether prices have bottomed out following a recent decline.Mild weather so far this winter has stoked a steady drop in oil and gas prices since September, reaching five-month lows after hurricane activity propelled crude futures to more than $70 a barrel in August. Recent government reports also indicate the nation’s reserves have been growing while demand has tapered.But analysts remain mixed on whether global production capacity can keep pace with an expected rise in heating oil demand this winter, particularly with forecasts for an approaching cold front that could hammer the northeastern United States, one of the world’s key energy markets.”I think people are starting to realize we might actually have a winter,” said Phil Flynn, an analyst with Alaron Trading Corp. in Chicago. “Despite the fact we have ample crude supplies, distillate supplies are low for this time of the year.” Distillates are refined crude oil products used by consumers, such as heating oil and gasoline.Light, sweet crude for January delivery rose 59 cents to $57.80 a barrel in afternoon trading on the New York Mercantile Exchange. The front-month contract price is 20 percent higher than a year ago, but has dropped about 18 percent since hitting an all-time high of $70.85 on Aug. 30, a day after Hurricane Katrina pounded key Gulf Coast refineries.Heating oil rose 1.38 cents to $1.71 per gallon in afternoon trading on the Merc.AccuWeather on Sunday forecast a nearing storm that could bring rain followed by harsh cold and snow in New York, Pennsylvania, Vermont, New Hampshire and Maine by midweek.”I may be in the minority, but I think there’s a strong possibility that we’re very close to the lows for the rest of the year,” Flynn said. “If we get the cold weather like some are predicting, the commodity funds will favor the long side of the market as we close out the year.”Elsewhere, Saudi Arabia said a “roadmap” to balance consumption and supplies was needed to avoid either gluts or shortfalls. The world’s top producer of crude also said the lack of information – not supply – was a root cause for wide swings in oil prices.Some analysts feel there is adequate supply to meet rising demand in winter, when consumption of heating oil and natural gas increase.But others say more stocks are needed, especially with forecasters predicting a frigid winter in the Northeast. Any supply outage from the weather or geopolitical uncertainties could cause prices to spike because of the world’s limited excess capacity to deal with such shocks, experts said.Gasoline prices rose 0.5 cent to $1.463 a gallon, while natural gas lost 24 cents to $11.390 per 1,000 cubic feet.January Brent crude on the ICE Futures exchange in London added 57 cents to $55.45 a barrel.Over the weekend, Saudi Oil Minister Ali Naimi blamed the instability of the oil market on excessive and inaccurate speculation.”The absence of clear and accurate information is one of the biggest problems facing the market,” Naimi said Saturday.Saudi Arabia is the biggest member of the Organization of Petroleum Exporting Countries cartel, which supplies nearly 40 percent of the world’s oil.”We don’t want to build and construct an expansion of production while we don’t have enough demand, or know how much demand we will have,” said Naimi. “The reason we ask for a roadmap for consumption is to try to avoid a mismatch between what producers do and what consumers do.”—Associated Press Writer En-Lai Yoeh in Singapore contributed to this report.