Posted on 12/05/2005 8:35:02 AM PST by Brilliant
VIENNA, Austria (AP) -- Oil prices spiked above $60 a barrel Monday amid reports that a snowstorm would hit the U.S. Northeast, the world's largest heating fuel market, and boost demand for crude oil and natural gas.
With winter weather settling in, natural gas, the other main fuel of choice, also headed upward.
Light, sweet crude for January delivery gained 91 cents to $60.23 a barrel by afternoon in Europe on the New York Mercantile Exchange.
January Brent rose $1 to $58.05 a barrel on the ICE Futures exchange in London.
Accuweather.com said the season's first big snowstorm was headed toward the Mid-Atlantic states and New England on Monday and Tuesday. The report said snow would reach Washington, D.C., midday Monday and New York City by the evening.
"The bulls are back in the market with just a little bit of cold weather," said energy analyst Victor Shum of Purvin & Gertz in Singapore. Ken Hasegawa of Tokyo-based brokerage firm Himawari CX said the price of January Nymex crude may break through the $60.50 a barrel level.
In recent weeks, oil prices have been dictated largely by weather patterns in the U.S. Northeast. Spells of warmer weather have depressed prices, while forecasts for cold snaps have raised them.
"Refineries will have to run hard to produce heating oil to meet demand" as winter kicks in, Shum said. "This chews up more of the crude, which in turn drives up crude prices."
Nymex heating oil rose 3 cents to $1.7020 a gallon while a gallon of gasoline fetched $1.6240, up more than a penny.
"The weather is driving up pricing in the entire energy complex," Shum said, noting that natural gas futures, commonly used by homes in the U.S. Midwest, have surged as U.S. temperatures dropped.
Natural gas futures advanced 45 cents to $14.380 per 1,000 cubic feet Monday, moving closer to their Oct. 25 record settlement of $14.338.
Last Thursday, the U.S. Energy Information Administration said inventories of natural gas fell by 49 billion cubic feet in the previous week to 3.225 trillion cubic feet, 2 percent below year-ago levels.
Traders are also looking ahead to the Organization of Petroleum Exporting Countries meeting in a week's time in Kuwait. Most analysts are not expecting OPEC to cut output when it meets. Typically, the organization considers cutting output when stocks start building and prices fall.
Looking toward Russia, a major non-OPEC supplier, PVM Oil Associates in Vienna noted production there -- at a daily 9.63 million barrels for November -- was the "highest oil output in post-Soviet history."
Crude futures are about 16 percent below their all-time high of $70.85 in late August after Hurricane Katrina battered the Gulf Coast.
OMG it's going to snow! That never happens in the Northeast!!!
Oh, no. Maybe it's good it doesn't rain oil, because if it did we would be living on Titan, and it's really cold there.
THey are looking fo rany reason to keep these prices inflated.
OMG it's going to snow! That never happens in the Northeast!!!
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Exactly the point. Just another case of speculators running amok and screwing the economy. Why is this news any more? I guess we will learn when another depression hits.
The oil speculators are really getting out of hand. Something should be done about this.
The explosion yesterday of the Venezuela pipeline probably had more to do with the increase of the price of oil, than the cold weather.
Bush obviously caused the snowstorm in order to make the price of oil go up.... And also to run interference to distract our attention from his policy of causing global warming.
I expect this snowstorm to wipe out all the refining capacity in the NE.
I always laff at these "snowstorm causes heating problems etc etc etc" when it's really the high pressure behind the storms that causes COLD problems....check the weather we have in the mid-west for example.
Absolutely!
We know that cloudy weather, w/or w/o snow, is almost always warmer in winter than sunny weather and clear skies. It also depends on what the jet stream is doing. Blame Canada!
Below zero again tonight and we don't catch a break until Friday. Now, I am wondering why gasoline has gone up so much at the wholesale level? Is all the refining capacity being shunted to heating oil?
Patience. Sooner or later the speculators all get slaughtered. That's why they call them "Bulls".
> Just another case of speculators running amok and screwing the economy.
It's also the chicken little style of reporting. I was quoted $2.29/gallon this morning in suburban Boston for no. 2 heating oil. That's not great by any means, but at least it's down from $2.44 a month ago.
It's an interesting fact that when it snow it's normally warmer than when it's sunny in the dead of winter. Snow is 32 degrees, and the cloud layer tends to act as an insulator. When it's clear, radiational cooling can produce temperatures in the negatives numbers. Temperatures rarely get that cold when it's cloudy.
we need the ice ;-)
Only if the ambient is 32°F. If it gets colder, the snow gets colder. If it gets warmer, the snow turns to water. It does tend to snow less if it is below ~10°F. But that is because the dew point of the atmosphere has been driven low (i.e. little moisture left in the air).
Snow does have insulating properties that slow the transmission of heat through it. I believe that is mostly due to the amount of air space trapped inside.
Someone should tell them that in NE winters it's usually relatively warm when it's snowing and relatively cold when it's not.
MNF is in Philly tonight, and I guess they decided to call off the game and let us just watch the snow fall.
Oh wait! Those aren't snowflakes! Those are Seahawks falling into the endzone! Where are the Eagles? I can't see them.
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