Feb. 28 (Bloomberg) -- Crude oil rose to a four-month high
of $52.27 a barrel in New York as a snowstorm approaching the
U.S. Northeast may stoke heating-fuel demand.
Crude oil has jumped 17 percent in less than three weeks as
snowstorms and freezing weather swept into the Northeast, the
region that consumes 80 percent the nation's residential heating
fuel. Oil is also higher on concern that demand may be stronger
than forecast this year.
``We're getting more snow, which has prices moving higher,''
said Bill O'Grady, director of fundamental futures research at
A.G. Edwards & Sons Inc. in St. Louis. ``As long as winter is out
there you will see prices breaking out to new highs. Once winter
ends prices will probably fall.''
Crude oil for April delivery rose 16 cents, or 0.3 percent,
to $51.65 a barrel at 11:09 a.m. on the New York Mercantile
Exchange. Prices surged to $52.28, the highest price since Nov.
1. Futures are up 43 percent from a year ago.
Heating oil for March delivery rose 1.59 cents, or 1.1
percent, to $1.47 a gallon in New York. Heating-oil futures are
53 percent higher than a year ago.
``If we have a bullish demand year, the world oil supply
system could be put to the test toward the end of the year,''
said Robert Skinner, director of the Oxford Institute for Energy
Studies.
Heating Oil Demand
Temperatures in the U.S. Northeast will average 6.1 degrees
Fahrenheit below normal between March 1 and March 7, Belton,
Missouri-based forecaster Weather Derivatives Inc. said today.
Heating demand in the region will be 28 percent above normal, the
forecaster said.
OPEC President Sheikh Ahmad Fahd al-Ahmad al-Sabah said
he'll propose that the Organization of Petroleum Exporting
Countries maintain its current production ceiling when the group
meets next month, Agence France-Presse reported.
``Because prices are still high, we think we have to support
the idea of continuing with our ceiling and, if prices go higher,
even with that, we have to study maybe increasing our production
if it's necessary,'' al-Sabah, who is also Kuwait's oil minister,
was cited as saying by AFP.
Qatari Comments
Qatar's oil minister, Abdullah bin Hamad al-Attiyah,
yesterday said OPEC is more likely to cut output than increase it
at its March meeting.
``Forty dollar to $50 oil is too high and could affect
economic growth,'' al-Attiyah said. ``But growth in the U.S. and
U.K. hasn't been affected so far, though we need to be careful.''
The 11-member organization agreed to cut daily production by
1 million barrels beginning on Jan. 1 at a meeting in December.
OPEC ministers left production quotas unchanged at a meeting in
Vienna on Jan. 30.
``OPEC's saying that the rise in prices last year was well
absorbed last year, implying that they will do nothing to
restrain prices,'' said Nauman Barakat, senior vice president at
Refco Energy Markets in New York. ``They appear to have no
intention of raising output.''
In London, the April Brent crude-oil futures contract rose
34 cents, or 0.7 percent, to $49.95 a barrel on the International
Petroleum Exchange. Intraday prices touched $50.34, the highest
since Oct. 27.
``The economy seems to be ignoring the high prices because
growing incomes are more important,'' Skinner said in a telephone
interview from Oxford, U.K. ``China is still airborne as opposed
to having a soft landing and the U.S. economy is still booming
along. Gasoline demand is up and people are just paying higher
prices to drive around in small houses on wheels because they
feel good.''
To contact the reporter on this story:
Mark Shenk in New York at
mshenk1@bloomberg.net .
