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Oil price rises above US$60 for the first time this year

Oil prices climbed briefly above US$60 a barrel on Friday for the first time since the first trading day of the year, as the unrelenting chill throughout the US led traders to believe that heating fuel demand won't be letting up anytime soon.

Also boosting prices was growing tension between Iran and the US, as well as further signs that OPEC members are following through with the oil cartel's planned production cuts.

Prices have been flirting with the US$60-a-barrel mark all week, and finally surpassed it on Friday, erasing the big drops made last month that briefly brought prices below US$50 a barrel.

The biggest market driver in recent weeks has been the weather, which last week depleted US supplies of distillate fuels, which include heating oil, by the largest amount since December 2005, said Peter Beutel of Cameron Hanover. With temperatures still below normal across the northeast US, which consumes 80 percent of the nation's heating oil, traders are bracing for the US government inventory data on Wednesday to show an even bigger decrease.

"It's remained cold and blustery through the week," Beutel said. "I think some traders today thought, what could next week bring in the report?"

Light, sweet crude for March delivery rose US$0.18 to settle at US$59.89 a barrel by afternoon trading on the New York Mercantile Exchange, after rising as high as US$60.80.

Before Friday, crude oil had come close to, but hadn't traded above US$60 a barrel on the NYMEX since Jan. 3. On Thursday, the contract jumped US$2 to settle at US$59.71 a barrel.

"After two or three failures, and then getting above it, that's important in determining market direction," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. He said, though, it's too soon to say whether the market is firmly entrenched in an uptrend, especially with the end of winter heating fuel demand on the horizon: "It just looks like we've got another week or two of strength."

The Brent crude contract for March slipped US$0.02 to settle at US$59.01 a barrel on the London ICE Futures exchange.

On Friday, National Nigeria Petroleum Corp said it would cut crude loading volumes for February and declared a "force majeure" on cargoes, according to Dow Jones Newswires. The reduction followed a Thursday report by Lloyds' marine intelligence unit that OPEC last month reduced crude oil exports by 200,000 barrels a day -- convincing some skeptical traders that the cartel is complying, at least gradually, with the production cuts it announced late last year.

Also buoying oil prices, Iran on Thursday stepped up its warnings to the US, which rekindled worries that supplies out of the oil producer could be hindered. Iranian supreme leader, Ayatollah Ali Khamenei, said Tehran would strike US interests around the world if his country is attacked.

In other NYMEX trading, natural gas fell US$0.044 to settle at US$7.827 per 1,000 cubic feet (US$0.2764 per cubic meter).

NYMEX heating oil futures rose less than US$0.01 to settle at US$1.7251 a gallon (US$0.4557 per liter), while gasoline futures rose US$0.0215 to settle at US$1.6148 a gallon (US$0.4266 a liter).
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