Oil prices extended gains above $60 on Tuesday as forecasts of a cold spell in the US Northeast buoyed heating oil, and as a weaker dollar and a Saudi warning of possible new output curbs bolstered the market.
US light crude rose 13 cents to $60.45 a barrel, after gaining $1.08 on Monday, the first day of trade in New York after the two-day Thanksgiving holiday. London Brent crude for January delivery gained 16 cents to $60.60 a barrel. "We still expect oil prices to remain in a mid-fifties to low-sixties band for now," Tobin Gorey, commodity strategist at Commonwealth Bank of Australia, said.
"Sustained colder weather is the most likely reason for it to break through the high side." Private forecaster AccuWeather said on Monday cold weather would sweep into the US East Coast by the weekend, ending a stretch of above-normal temperatures in the world's top heating oil market that has curbed energy demand.
The forecast helped heating oil futures lead the complex higher. Oil has been stuck in a two-month trading rut of $58-$62 a barrel, showing few signs of resuming a climb back toward a record high of $78.40 a barrel hit in mid-July.
The National Weather Service said on Monday heating demand in the United States this week would be about 24 percent below normal as mild weather prevails in most of the country, continuing a warm trend that has kept a lid on demand for heating oil and natural gas.
Oil prices were also supported by the weaker US dollar that stood near a 20-month low against the euro on Tuesday on expectations that euro zone interest rates will continue to rise narrowing the dollar's yield advantage.
Traders were also looking at an Opec's meeting next month. Opec powerhouse Saudi Arabia said on Saturday the exporting group in its next meeting on December 14 would cut output again if the previous reduction failed to balance the market, which has bolstered oil prices so far.
Oil Minister Ali al-Naimi had said in October a further cut of 500,000 barrels per day (bpd) might be needed after Opec decided at an emergency meeting last month to cut output by 1.2 million bpd to buoy the market from November 1.
In Iraq, mortar attacks set ablaze oil storage tanks in the country's northern part. A source at the state North Oil Company said output from the region could be reduced for some time. The northern oilfields, clustered around Kirk, used to pump a third of Iraq's 3 million-bpd output before the 2003 US led invasion. Since 2003, output has sagged to around 2 million bpd.