US oil prices rise before winter freeze

A winter storm forecast for the northeastern part of the United States lifted oil prices Monday and revived fear of a harsh winter stretching heating fuel supplies.

Unusually mild weather in the northern hemisphere so far this month has given refiners more time to build stocks ahead of the winter months, when demand for crucial heating fuel is expected to surge.

The milder weather and rising stockpiles contributed to low New York crude futures on Friday ending at 56.14 dollars a barrel, the contract's lowest finish since June 15.

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.

New York's main contract, light, sweet crude for January delivery rose 59 cents to 57.80 dollars 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 dollars on Aug. 30, a day after Hurricane Katrina pounded key Gulf Coast refineries.

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 dollars a gallon, while natural gas lost 24 cents to 11.390 dollars per 1,000 cubic feet.

January Brent crude on the ICE Futures exchange in London added 57 cents to 55.45 dollars a barrel.

Source: Xinhua