Tuesday January 13, 08:45 PM
Oil prices edge higher amid US cold snap
NEW YORK (AFP) - Oil prices rose Tuesday, getting a modest lift from a US cold wave, following hefty losses stemming from concerns about weak energy demand amid the global economic downturn.
New York's main contract, light sweet crude for delivery in February, rose 19 cents to close at 37.78 dollars a barrel.
In London, Brent North Sea crude for February rallied 1.92 dollars to settle at at 44.83 dollars on the InterContinental Exchange.
On Monday, oil slumped under 40 dollars in New York on concerns that a deepening global economic downturn could extend the slump in demand for energy.
OPEC oil producers are prepared for "further measures" to shore up crude prices, the cartel's secretary general said Tuesday, adding that it was too soon to determine the impact of an output cut that took effect January 1.
Saudi Arabia, kingpin of the Organization of the Petroleum Exporting Countries, has signaled its output would fall below its quota by February.
Analysts said that oil prices generally were headed lower after hitting record peaks above 147 dollars a barrel last July.
"The market is now in a familiar pattern, ongoing since the mid-summer high. After two or three sessions of price recovery, buyers run out of resolve and sellers return in earnest, creating the familiar 'stair-step' pattern," said John Kilduff, analyst at MF Global.
Kilduff said the price gains were supported by a bitter cold wave sweeping the eastern third of the United States and Saudi Arabia's production cutback.
"Today's rise on the Saudi actions and weather concerns are likely to be obviated by another (US) inventory report tomorrow showing swelling stockpiles," he said.
The US Department of Energy (DoE) publishes its weekly reserves report Wednesday.
Oil prices fell 16 percent last week after an increase in US energy (NASDAQ: USEG - news) stockpiles stoked concerns about the soft demand in the world's biggest energy consumer amid a deepening recession.
"The market is focused on rising inventories at the moment, as demonstrated by the significant increase in crude inventories at Cushing, Oklahoma," Cameron Hanover analysts said.
Oil reserves in Cushing, where light, sweet crude oil is stored, are currently at maximum capacity.
The US government revised lower Tuesday its 2009 price forecast for New York crude oil to 43.25 dollars a barrel, from a December estimate of 51 dollars, due to plunging demand and substantial supplies.
"The downward trend in oil prices continued in December as the worsening global economy weakened oil demand and the second Organization of Petroleum Exporting Countries (OPEC) agreement for substantial production cuts within a month has failed, thus far, to support substantially higher prices," said the Energy Information Administration, part of the DoE.
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