Feb. 2 (Bloomberg) -- Crude oil surged above $59 a barrel in New York, the highest close this year, because of increasing fuel demand in the U.S. and OPEC's production cuts.

Heating consumption in the Northeast will be 36 percent above normal in the next week, Weather Derivatives, a forecaster in Belton, Missouri, said. Government reports this week showed that the U.S. is growing at a moderate rate, which may boost fuel use. The Organization of Petroleum Exporting Countries agreed to trim output by 500,000 barrels a day starting yesterday.

``Demand for transportation fuels in the U.S. is robust and heating oil demand has picked up with the arrival of cold weather,'' said Antoine Halff, a vice president and head of energy research at Fimat USA Inc. in New York. ``On the supply front, there's growing anticipation of the OPEC cuts and the situation in a number of exporting countries is scary.''

Crude oil for March delivery rose $1.72, or 3 percent, to $59.02 a barrel on the New York Mercantile Exchange, the highest close since Dec. 29. Futures touched $59.25, the highest intraday price since Jan. 3. Prices jumped 6.5 percent this week, the biggest weekly gain since the week ended Dec. 1. Oil prices are down 8.8 percent from a year ago.

``We've had a good run this week and I think the market is heading for a $58-to-$62 range,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``Whenever prices fall lately it's become an opportunity for new people to enter the market, pushing prices higher.''

Cold Weather Persists

The National Weather Service predicted that below-normal temperatures will persist in the Northeast through Feb. 16. The region is responsible for 80 percent of U.S. home heating oil consumption. Mild weather in December and early January helped push New York futures to $49.90 a barrel on Jan. 18, the lowest since May 25, 2005.

``There's no question that this will be the coldest weather system this winter,'' said Ken Reeves, director of forecasting operations at AccuWeather in State College, Pennsylvania. ``The first 10 days of February will be characterized by intense cold weather in the eastern U.S. while the second 10 days will probably bring heavy snowfall to the Northeast.''

Total U.S. fuel consumption grew 2.5 percent to 20.9 million barrels a day last week, the Energy Department reported on Jan. 31. Distillate demand jumped 11 percent to 4.54 million barrels a day, the highest since November, according to the department, which tracks shipments from refineries, pipelines and terminals to calculate demand,

OPEC shipments of crude oil will decline 0.16 percent in the month ending Feb. 17 as the group continues to implement a production cut agreed last year, consulting company Oil Movements said. The group will load 24.5 million barrels a day onto tankers in the period, down from 24.54 million barrels in the four weeks ended Jan. 20, the Halifax, England-based consultant said.

Venezuela Oil Projects

Venezuela intends to take control of ``no less than 60 percent'' of four heavy-crude-oil joint ventures in the country's eastern Orinoco Belt by May 1, President Hugo Chavez said yesterday. The four projects produce about 600,000 barrels of synthetic oil a day. Venezuela is the fourth-biggest source of U.S. oil imports.

The projects may be seized if no agreement is reached before the end of April, Oil and Energy Minister Rafael Ramirez said, when asked by reporters about Chavez' earlier remarks.

``Cold weather, OPEC, the nationalizations in Venezuela, there's a long list of things to keep the market nervous,'' said Tom Bentz, an oil broker with BNP Paribas Inc. in New York. ``The Iran nuclear issue could heat up at any time as well, providing further support.''

Middle-East Violence

Crude oil futures in New York jumped to a record of $78.40 a barrel on July 14 partly because of violence in the Middle East and concern that Iran's defiance of United Nations nuclear inspectors might disrupt the nation's exports. The U.S. accuses Iran of building a nuclear-weapons program, while Iran says its nuclear activities are legal and meant to generate electricity.

Iran has begun installing parts for uranium-enriching centrifuges at its Natanz nuclear facility, ignoring UN sanctions against the country, Agence France-Presse said today, citing unnamed diplomats.

Crude oil may rise next week, according to a Bloomberg News survey of analysts, traders and brokers. Twenty-five of 47 respondents, or 53 percent, said prices will increase. Fourteen expected a decline and eight forecast little change. Last week, 56 percent of respondents expected futures to rise.

Brent crude oil for March settlement rose $1.69, or 3 percent, to $58.41 a barrel on the London-based ICE Futures exchange, the highest close since Jan. 2.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: February 2, 2007 17:19 EST