Oil prices climb as temperatures fallEnergy demand seen rising as winter sets in
updated 11:37 a.m. ET Jan. 14, 2008
NEW YORK - Oil prices climbed Monday as forecasts for blustery weather nationwide raised expectations that demand for energy will surge in the coming days.
Rising political tensions in the Middle East contributed to the advance, apparently outweighing worries that a weakending U.S. economy could curb oil demand.
After opening lower, light, sweet crude for February delivery rose $1.03 to $93.72 a barrel by late morning on the New York Mercantile Exchange. In London, Brent crude gained $1.31 to $92.38 a barrel on the ICE Futures exchange.
The main thrust to the upside is pretty clearly weather driven,” said Citigroup Global Markets energy analyst Tim Evans. “That has the natural gas market extending last week’s gains and making heating oil the leader on the upside of the petroleum complex.”
Heating oil futures added nearly 5 cents to $2.5834 a gallon, while natural gas futures gained 17.5 cents to $8.385 per 1,000 cubic feet.
The National Weather Service is calling for below-normal temperatures across most of the country over the next two weeks. The Midwest is the heart of the natural gas market, while the northeastern United States is a major consumer of heating oil.
Meanwhile, President Bush on Sunday called Iran “the world’s leading state sponsor of terror” while on a visit to Abu Dhabi. Bush said Iran funds militant groups such as Hamas, Hezbollah and Islamic Jihad and sends arms to the Taliban in Afghanistan and Shiite extremists in Iraq. Iran’s foreign minister responded by calling for an end to what he called U.S. meddling.
Any comments by world leaders about the Middle East can add to the market’s nervousness. Iran is the second largest producer in the Organization of Petroleum Exporting Countries — which supplies 40 percent of the world’s daily oil needs — and tension between any OPEC member and the West usually raises concerns about the flow of oil supplies.
Continued shelling by Turkey at suspected Kurdish rebel positions in northern Iraq also fed worries about a supply disruption.
But uneasiness about a possible U.S. recession suggested that the price rally could be short lived.
“The threat of an economic downturn in the U.S. continues to weigh on the crude oil market,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
In a similar vein, Vienna’s PVM Oil Associates said “increasingly dire” economic data could limit gains, noting predictions by Goldman Sachs of the U.S. economy falling into recession this year; a report that U.S. growth already declined slightly in the fourth quarter of the past year, and a warning from American Express of increasing credit card defaults.
In other trading, gasoline prices rose more than 3 cents to $2.2506 a gallon. At the pump, the average U.S. retail price of a gallon of regular gasoline dipped to $3.07 from $3.095 on Friday, according to AAA and the Oil Price Information Service. Gas prices have been retreating lately, following oil’s tumble from its record $100.09 a barrel reached Jan. 3.
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