Oil prices rose in Asian trading Monday amid expectations that heating fuel demand will increase amid forecasts of continued cold weather across the U.S. East Coast, a major market for heating oil.
"The continuation of cold weather in the United States after a pretty warm start of the winter helps shore up prices because if there was no cold weather at all, there would be huge inventories," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "The market's not worried about that any longer."
An unusually warm winter in the U.S. drove crude oil below US$50 a barrel earlier this month, but the price has since risen about 10 percent as cold weather returned. Forecasters predicted below-normal temperatures gripping the U.S. East Coast region to continue into at least the first week of February.
Light, sweet crude for March delivery gained 31 cents to US$55.73 a barrel in electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore. The contract rose US$1.19 to settle at US$55.42 a barrel on Friday.
March Brent crude on the ICE Futures exchange in London rose 36 cents to US$55.65 a barrel.
Heating oil prices rose a cent to US$1.6014 a gallon (3.8 liters) while natural gas futures dropped 0.53 cent to US$7.122 per 1,000 cubic feet.
But Ken Hasegawa of Tokyo brokerage Himawari CX said traders were uncertain if oil prices would continue to rise "as supply is not tight at all, and profit-taking sales may drive the price below US$55 (a barrel) if crude fails to breach US$56" a barrel.
Also supporting crude prices were supply concerns stemming from reports that more OPEC members were complying with the cartel's pledges to cut output.
Tank tracker Lloyds Marine Intelligence Unit said Friday that oil exports from the Organization of Petroleum Exporting Countries fell to less than 23 million barrels a day in December from just under 24 million barrels a day in November, according to Dow Jones Newswires.
Saudi Arabia, the world's largest crude oil producer and exporter, was the quickest to implement OPEC's production cuts; its exports in December were 1.1 million barrels a day lower than before the OPEC's October call for production cuts, reports AP.
OPEC said it would begin cutting production by 1.2 million barrels a day in November, but some traders speculate that some cartel members were not complying. The 12-member group said late last year it planned to cut production an additional 500,000 barrels a day starting Feb. 1.