Oil prices turned higher on Monday as ferocious late-winter weather lashed the US eastern seaboard, leaving dealers mildly concerned about possible knock-on effects on demand.
A barrel of Brent North Sea crude for April delivery was selling for $26.85 late on Monday, up sharply from $26.00 at the close on Friday. New York futures meanwhile rose 95 cents in early dealing on Monday to $28.79.
The inclement weather was expected to dump up to two feet (60 centimeters) of snow across the eastern United States, and dealers predicted an up tick in demand as a result.
"Probably the most important factor is the snowstorm in the United States and it serves as a timely reminder that winter does not necessarily end at the end of February," said the GNI brokerage in a research note.
It added that the unseasonable weather presented a headache for the Organization of Petroleum Exporting Countries (OPEC), which is to decide next week whether to slash output for the second time this year to give a lift to prices.
The authoritative Middle East Economic Survey (MEES) reported on Monday that OPEC was "virtually certain" to cut oil production at a March 16 Vienna meeting, but had yet to decide by how much.
"Before finalizing an agreement on how much to cut, OPEC will take a comprehensive look at current market conditions," the Cyprus-based industry newsletter said.
But GNI said that persistent poor weather in the United States would push up prices and make it harder for OPEC to find a broad agreement on an output cut.
"If weather support has not been removed from the market by March 16, the cartel will find itself split between those who feel a cut is seasonally justified and those who do not because of current prices," GNI said.
OPEC cut output by 1.5 million barrels a day -- more than five percent of total production -- from February 1 to support prices, which remain 25 percent below last year's high-water mark above $35 a barrel.
MEES said attention would focus ahead of the Vienna gathering on talks expected to take place in Riyadh next Monday between the oil ministers of OPEC giants Saudi Arabia and Venezuela with independent producer Mexico.
"The purpose of the meeting will be to discuss international oil markets and to demonstrate the continuity of the commitment by non-OPEC producers to coordinate their polices with OPEC's," said MEES.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)