Oil prices rise on expected increase in demand driven by cold weather in Eastern USA

29-Jan-07

Forecasters have predicted below-normal temperatures in the U.S. East Coast region to continue into at least the first week of February. Monday morning saw oil prices rise in Asian trading amid expectations that heating fuel demand will increase on forecast of continued cold weather across the U.S. East Coast. Light, sweet crude for March delivery rose to US$55.84 a barrel in electronic trading on the New York Mercantile Exchange, midmorning in Singapore. An unusually warm winter in the U.S. drove crude oil below US$50 a barrel earlier this month, but the price has since risen about 10% at the onset of cold weather. Another factor supporting crude prices reports that more OPEC members were complying with the cartel's pledges to cut output, that have given rise to supply concerns. OPEC had planned to begin cutting production by 1.2 million bpd in November and also planned to cut production an additional 500,000 bpd starting Feb. 1. Oil exports from the Organization of Petroleum Exporting Countries have been reported to have fallen to less than 23 million bpd in December from just under 24 million bpd in November. Saudi Arabia, the world's largest crude oil producer and exporter, was the quickest to implement OPEC's production cuts; its exports in December were 1.1 million barrels a day lower than before the OPEC's October call for production cuts.