Oil spurts above $24 a barrel on US cold, OPEC cut warning
prices spurted up above $24 a barrel here on Wednesday as cold weather bit on both sides of the Atlantic while exporting countries mused aloud about the possibility of a sharp cut in output.
A barrel of Brent North Sea reference crude for February delivery jumped to $24.08 in late trade. It had opened at $24.30 after a four-day Christmas break, from $23.66 at the close on Friday.
In New York, the February light sweet crude contract was trading at $26.56 . It had gained half a dollar on Tuesday to $26.56 , as sub-zero temperatures gripped swathes of the United States, leading to a jump in demand for heating oil.
"Energy prices have soared over the Christmas break on the back of freezing conditions across the United States with heating oil showing the most strength," said the GNI brokerage in a research note.
The US Northeast looks set to remain cold with temperatures well below freezing for the rest of the week, according to weather forecasts.
Analysts also noted the increasing volume and frequency of statements from ministers of the Organisation of Petroleum Exporting Countries (OPEC) calling for a cut in production to support prices before winter demand starts to ebb.
OPEC countries are worried that handsome windfalls which resulted from soaring crude prices earlier this year could be eaten away if the market slumps. Prices have already fallen by some 30 percent since peaking above $35 a barrel in October.
OPEC President, Ali Rodriguez of Venezuela, said over the weekend that if OPEC's basket crude price remained under $22 a barrel "production will be reduced by 500,000 barrels a day". OPEC's basket price fell below $22 a barrel on Friday for the first time in eight months.
Iran's representative at OPEC Hossein Kazempour-Ardebili called for more drastic measures.
"Given the current state of the market, OPEC must reduce production by at least one million barrels a day," he was cited by state television as saying.—AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)