Crude oil prices rose above $46 a barrel Monday, as rough weather slowed plans to return to full production from the North Sea and amid some worry that OPEC producers may cut output again later this month.
In the short term, however, analysts said they expected prices to stall barring major disruption and violence in the Middle East, particularly in pre-election Iraq.
While oil prices are well below the late October high of more than $55 a barrel, traders remain wary about tight heating oil supplies in the United States, as well as possible supply disruptions in Iraq and terrorist activity in Saudi Arabia, the world`s top supplier of crude oil.
Prices for crude oil were up 83 cents in late afternoon trading in Europe, with a barrel fetching $46.26 on the New York Mercantile Exchange. Heating oil prices jumped nearly 5 cents to $1.3205.
Brent crude for February delivery spiked upward 85 cents at $44.03 on the International Petroleum Exchange.
``Investors are getting skittish,`` said Esa Ramasamy, oil editorial manager of energy reporting agency Platts.
OPEC members reduced production by 1 million barrels a day from the start of 2005 to bring the cartel closer to its official output ceiling of 27 million barrels. Oil ministers said then that they were ready to reduce output again if needed when they meet at their Vienna headquarters on January 30.
``The Saudis have already said they`d like to keep prices for their own crude above $35,`` said Deutsche Bank oil price strategist Adam Sieminski in London. ``It`s now about $38.``
Sieminski said that gale-force winds reaching into Scandinavia were keeping about 350,000 barrels of North Sea oil from reaching the market each day.
The storms hampered Norway`s oil production for a fourth day Monday by delaying repairs at three offshore fields that account for about 11 percent of the nation`s output. Norway is the world`s third-largest oil exporter.
On the plus side, Sieminski said he expected stalled oil production in Nigeria to resume soon.
On Wednesday, oil prices fell after a U.S. government report showed larger-than-expected increases in winter fuel supplies, sending heating oil prices lower. The increase was much higher than expected, although it still leaves inventories 11 percent below year ago levels, according to the Energy Information Administration.
Sieminski said traders were looking for direction in an International Energy Agency oil report due Tuesday.
Markets were rattled throughout 2004 by stronger-than-expected demand and persistent supply fears and unrest in key producers Saudi Arabia, Russia, Venezuela, Nigeria and Iraq.
END
