Washington – Oil prices jumped by more than $1 a barrel Monday as OPEC prepares to meet later this week and cold weather forecasts prompted traders to bid up the cost of home-heating fuels.
Natural gas futures surged by almost 14 percent.
The Organization of Petroleum Exporting Countries said this weekend that it would hold an emergency meeting Thursday in Qatar to discuss production quotas. Some members have suggested a cut of 1 million barrels per day was possible.
The impact of such a cut remains uncertain, 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.
Light sweet crude oil for November delivery on the New York Mercantile Exchange rose $1.38 to $59.95 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.
Across the U.S., the average price at the pump for regular unleaded is $2.23 a gallon, according to the Oil Price Information Service – well below the summer peak above $3.
Gasoline can be found for less than $2 a gallon in many parts of the country, and OPIS analyst Tom Kloza said Missouri is on course to become the first state with average prices below that psychological level.
But it was home-heating, not transportation, fuels that led oil prices Monday with forecasters calling for a cold blast to hit the Rockies later this week Nymex heating oil futures increased 3.62 cents to $1.754 a gallon, and natural gas futures rose 78.5 cents to $6.44 per 1,000 cubic feet.
“The ultimate fate of the market is how cold our winter is,” said Alaron Trading Corp. analyst Phil Flynn.
In its monthly oil market report, OPEC trimmed its global demand forecast by 100,000 barrels a day. It also expressed concern about competition from non-member producers, saying non-OPEC supply growth has picked up in 2006 by 1.1 million barrels a day and is expected to grow next year by 1.8 million barrels a day.
