Oil prices rose above $94 on Monday in thin trading as dealers anticipated a further tightening of US energy stockpiles and foul weather forced Mexico to shut two key oil ports. The gains, however, were tempered by forecasts that mild weather in the Northeast would slash demand for fuel in the world's largest heating oil market.
US crude settled up 82 cents to $94.13 a barrel after trading between $92.50 and $94.23. Brent crude rose 24 cents to $92.70. The gains came as oil analysts anticipated a government report to be released later this week that is expected to show US crude inventories fell 1.8 million barrels last week.
US oil inventories are already at their lowest level in nearly three years after dense sea fog along the Gulf Coast slowed down imports.
More support for oil prices came from news on Monday that foul weather shut down two Mexican oil ports, potentially further slowing shipments into the United States. Mexico's transport ministry said the ports of Dos Bocas and Cayo Arcas, both located on the Gulf of Mexico, were shut for the second straight day, while Coatzacoalcos port reopened after being closed Sunday afternoon.
The gains were tempered by a US government prediction that nation-wide heating demand would be about 17 percent below normal this week and that the weather would remain mild into the first week of January. "There have already been winter storms in the US, but the 14-day outlook is for temperatures to be above normal," said Olivier Jakob of oil consultancy Petromatix.
Oil prices have been holding in range below last month's all-time peak $99.29 a barrel as dealers weigh tight inventories in the world's top consumer nations against the threat that an economic slowdown will cut consumption.
Energy forecasters including the International Energy Agency and producer group Opec have cut projections for world oil demand growth in 2008, citing the threat of an economic slowdown. Oil dealers said Monday that Turkish incursions into northern Iraq to attack Kurdish rebels were also supportive of crude prices, dimming the prospects of a sustained recovery in oil exports from the region.
Oil is up more than 50 percent in nominal terms since January and the average price for the first delivery month on the New York Mercantile Exchange is now around $72, up from $66.25 in 2006. A Reuters poll showed analysts expect oil prices to average above $77 a barrel next year as tight Opec supplies and Middle East tensions outweigh concerns about a sluggish US economy.
SINGAPORE: Oil prices were little changed above $93 a barrel in very light holiday trade on Monday, with dealers weighing thinning world stocks against the outlook for the US economy and the possibility of a warm winter.
US light, sweet crude for February delivery slipped 16 cents to $93.15 a barrel, holding most of Friday's over $2 surge, following data that lifted some of the gloominess about prospects for US economic growth next year.
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