Crude oil prices edged up on Tuesday as weather watchers predicted a colder-than-normal winter in the north-eastern United States, raising concerns that supplies will be inadequate due to hurricane damage to refineries.
Benchmark light, sweet crude for front-month November delivery rose by 33 cents to $62,13 a barrel on the New York Mercantile Exchange midmorning in Singapore, putting prices nearly 20% higher than a year ago.
The contract had fallen four cents to close at $61,80 in New York on Monday amid signs of lower demand due to higher prices.
Respected forecaster Accuweather.com said in its 2005/06 winter forecast that ”colder-than-normal temperatures” are expected over the north-eastern US, which consumes most of the country’s winter heating fuel.
”The north-east has seen more snowfall than average in four of the past five winters, and that trend looks to continue again this winter,” Accuweather said in its report. ”Factors in the North Atlantic leads to enough cold in the region so that even if it is drier than normal, it will snow more than normal.”
A colder winter would result in increased consumption of home heating fuels, putting pressure on prices and US refineries’ ability to produce the fuel. Hurricanes Katrina and Rita knocked out or shut down a number of the country’s largest refineries, undermining supply.
Heating oil rose by more than half a cent on Tuesday to $1,9779 a gallon (3,8 litres), gasoline rose a cent to $1,81 and natural gas was up 12 cents to $13,097 per 1 000 cubic feet.
Also, the Minerals Management Service said more than a million barrels of crude remains shut in from the hurricanes in the Gulf of Mexico. It amounts to nearly 78% of the daily total.
On Thursday, the US Department of Energy will release its weekly petroleum stocks report, which is likely to show a drop in crude, gasoline and distillate inventories, a Dow Jones Newswires poll showed. This is normally a time when inventories grow, as refineries boost production ahead of winter.
Prices rose all of 2004 and into 2005 from rising demand, geopolitical unrest and a series of weather-related outages that began with Hurricane Ivan last year. This year, Hurricane Katrina sent crude surging to a record $70,85 on August 30 when the storm made landfall.
Now some analysts are warning that developments in Nigeria, Africa’s largest exporter of crude and a major supplier to the US, could affect prices.
”With global oil markets still focused on post-hurricane recovery in the US, potentially worrying developments in Nigeria are commanding less attention,” Energyintel analyst Jane Collin wrote in a research note from London.
”Nigerian courts have just accused rebel leader Mujahid Dokubo-Asari of treason,” added Collin. ”His arrest last month led to protests that affected Shell and Chevron, and the fear is that the severity of the charges brought against him will incite more violence.” — Sapa-AP