SINGAPORE, (AP) – Oil prices rose above $60 a barrel Tuesday as traders awaited an OPEC meeting later in the week for a clearer price direction. Cold weather forecasts in the U.S. also prompted traders to bid up the cost of home-heating fuels.
Light, sweet crude for November delivery rose 24 cents to $60.18 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract jumped $1.37 to settle at $59.94 a barrel on Monday.
The Organization of Petroleum Exporting Countries said this weekend that it would hold a meeting Thursday in Qatar to discuss production quotas. Some members have suggested a cut of 1 million barrels per day was possible.
“The market is waiting for the OPEC meeting for the members to confirm what I believe has already been priced into the market. Participants already expect an output cut after the meeting,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
The impact of such a cut remains to be seen, with traders eager to see whether OPEC merely reduces its official output quota or reduces production from current levels, which are already slightly below the quota.
The last time OPEC reduced its output — also by 1 million barrels a day — was December 2004 when oil traded slightly above $40 a barrel.
Since a mid-July high of $78.40 a barrel, the price of crude oil has dropped by about 25 percent due to rising global inventories, concerns about slowing economic growth and a milder-than-anticipated hurricane season.
U.S. weather forecasts for a cold blast to hit the Rockies and below-normal temperatures in much of the eastern two-thirds of the country later this week were also supporting prices on concerns that demand for heating fuels will jump.
“Demand for oil should be robust as typically the Northern Hemisphere winter season brings peak demand for oil in the world,” Shum said.
Analysts surveyed by Dow Jones Newswires expected weekly petroleum inventories data to be released Wednesday to show a decline in distillate stocks, which include heating oil, by 900,000 barrels.
Heating oil futures gained 0.61 cent to $1.7626 a gallon while gasoline prices rose 0.82 cent to $1.4999 a gallon. Natural gas futures rose 12.8 cents to $6.572 per 1,000 cubic feet.