Crude oil futures dipped slightly yesterday as the snowstorm that hit the US Northeast on Sunday continued to paralyze transportation networks, slowing demand for crude oil.
Light sweet crude for March delivery was down US$0.16 at US$48.65 a barrel on the New York Mercantile Exchange during electronic trading midday in Asia. Heating oil for February delivery dipped by less than US$0.50 to settle at US$1.409 a gallon.
While the ongoing cold spell in the US Northeast has increased the demand for heating oil, the freeze on transportation networks has weakened demand for transportation fuels, producing a "counter-effect" on pricing, said Esa Ramasamy of Platts, an energy reporting agency.
"Now what you're seeing is a run-up in heating oil, not crude oil," Ramasamy said.
In New York, residents were advised to keep their cars off the road for the weekend as snow removers tried to clear about 10,000km of roadway.
About 400 flights were canceled on Saturday at Chicago's O'Hare International Airport and dozens more were called off at the city's Midway Airport. More than 200 people stayed the night at the airports because of canceled flights.
OPEC ministers are scheduled to meet on Jan. 30 to discuss whether additional production cuts may be necessary.
Some of the members suggested on Monday, however, that the current high prices might mean that the group may not cut output quotas, easing the market slightly.
Iranian oil minister Bijan Zanganeh said OPEC preferred to keep the price of its reference crude basket -- last valued at US$41.63 a barrel -- below US$40.
Zanganeh also said Indonesia's oil minister, Purnomo Yusgiantoro, said on Monday that current price strength means OPEC should maintain existing production limits at Sunday's meeting.
OPEC agreed last month to cut production by 1 million barrels a day starting this month to bring output closer to its self-imposed target of 27 million barrels a day.