Oil prices firmed near $52 a barrel Monday as a blast of cold, snowy weather in the U.S. Northeast threatened to tighten already strained heating oil supplies in the world's largest energy consumer.
NEW YORK Oil prices firmed near $52 a barrel Monday as a blast of cold, snowy weather in the U.S. Northeast threatened to tighten already strained heating oil supplies in the world's largest energy consumer.
Gains were limited after Kuwait's prime minister vowed to do all he could within the Organization of Petroleum Exporting Countries to bring high-flying prices under control.
U.S. light crude futures rose 26 cents to $51.75 a barrel on the New York Mercantile Exchange after striking a fresh four-month high of $52.28. London's Brent crude rose 35 cents to $50.06 a barrel on the International Petroleum Exchange.
U.S. demand for heating oil was expected to rise about 14 percent above normal this week as a major winter storm ran the length of the East Coast, leaving snow and frosty temperatures in its wake, according to the U.S. National Weather Service.
U.S. inventories of heating oil are already running more than 7 percent below year-ago, even as the stockpiles of gasoline and crude swell more than 8 percent percent higher than last year, according to government figures.
Heating oil futures settled up 3.73 cents, or 2.6 percent, at $1.4914 a gallon.
Bullishness was tempered after Kuwaiti Prime Minister Sheikh Sabah al-Ahmad al-Sabah said high oil prices were not in Kuwait's long-term interests and that he would do whatever he could within OPEC to bring prices under control.
The statement soothed some fears in the oil markets that OPEC was becoming comfortable with prices around $50 a barrel, after Saudi Oil Minister Ali al-Naimi said last week he expected prices to range between $40 and $50 this year.
Acting OPEC Secretary-General Adnan Shihab-Eldin said earlier on Monday the group saw a growing consensus that a $40-50 range was sustainable.
A weak dollar of late has also attracted an influx of speculative fund money that has helped drive up oil prices by more than $5 in less than three weeks.
Speculative funds have built net long positions in crude oil markets -- a bet that prices will rise -- to the highest level in more than eight months, the U.S. government said on Friday.
"That powerful but hard-to-track force known as the hedge fund appears to have made a strong push into the market over the past few weeks," analysts at Washington-based PFC Energy said in a report.
The price surge has provoked criticism from consuming nations that soaring energy bills may damage economic growth.
"I don't have any target for price, but I definitely think above $50 is too high," Claude Mandil, executive director at the International Energy Agency, told Reuters on Monday.
Japan's finance minister, Sadakazu Tanigaki, said prices and their effect on the global economy needed to be monitored closely.
German Chancellor Gerhard Schroeder, who is visiting the Gulf region this week, said on Monday he was very worried by the recent rise in oil prices, and urged oil producers to increase their output.
The price strength means OPEC oil producers have backed away from talk of a possible production cut for the second quarter, after the Northern Hemisphere winter.
Kuwait, which holds the cartel presidency, Qatar, Venezuela and Indonesia also have come out in favor of leaving OPEC formal output limits unchanged next month.
Iran, OPEC's second largest producer, believes the high prices mean the cartel has less interest in cutting output, a senior Iranian official said on Monday.
"Because of the increase in oil prices, the interest of countries in cutting output has decreased," Javad Yarjani, head of OPEC affairs at Iran's oil ministry, was quoted as saying by the ISNA students' news agency.