Oil prices rose Monday in Asian trading as a winter storm plowed across the United States, spurring expectations of strong demand for heating oil.
The winter storm churned toward the U.S. East Coast after dumping as much as 2 feet of snow in the Midwest, grounding hundreds of airline flights and closing major highways. By midday Sunday in the United States, snow was dwindling but still falling from Washington D.C. to the Dakotas.
"Oil prices have been driven by the weather, as what is perhaps the last winter storm of the year passes through the U.S. Midwest toward the East Coast, driving strong demand in heating oil," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Light, sweet crude for April delivery rose 31 cents to $61.45 a barrel in electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore. The contract added 19 cents Friday to settle at $61.14, its highest closing price since Dec. 22.
April Brent crude on London's ICE Futures exchange rose 34 cents to $61.22 a barrel.
Oil prices were also supported by U.S. inventory figures released last Thursday which showed a larger-than-expected decline in distillates, which include heating oil and diesel, as well as a drawdown in gasoline inventories.
Market participants reacted slightly to news that Iranian President Mahmoud Ahmadinejad said Sunday his country's disputed nuclear program was like a train without brakes or a reverse gear. Iran, OPEC's No. 2 supplier, also said it successfully tested a rocket that went into space, apparently part of its drive to launch five satellites into orbit by 2010.
"The market has largely factored in the geopolitical threat posed by Iran, therefore you don't see a sharp rise in prices. But it's a reminder to investors that there's possibly more upside than downside potential in the immediate future due to geopolitical issues such as Iran," Shum said.
Senior diplomats from the five permanent U.N. Security Council nations and Germany will meet on Monday in London to start work on a new resolution to try to pressure Iran to suspend its uranium enrichment program, which can lead to the production of nuclear weapons.
Heating oil prices gained 0.95 cent to $1.76 a gallon while natural gas futures rose 2.7 cents to $7.782 per 1,000 cubic feet.
source news : greenwichtime.com
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