SINGAPORE – Crude futures (search) bounced higher Tuesday following a 6 percent drop the day before as forecasts for warmer weather in the U.S. eased worries about tight supplies of winter fuel.
Benchmark light, sweet crude for February delivery climbed 48 cents to $41.80 per barrel in early trade on the New York Mercantile Exchange (search). Oil prices fell $2.86 a barrel Monday.
Oil prices are nearly 25 percent below the late October high above $55 a barrel, though they remain nearly 30 percent higher than a year ago.
"If winter weather doesn't set in, there will be a lot of downward pressure on the market," said Esa Ramasamy, oil editorial manager for energy reporting agency Platts in Singapore.
Forecasts show warmer weather in the key U.S. Northeast later this week and next week. Traders are also looking ahead to the Energy Department's (search) next petroleum supply report, which is scheduled to be released Wednesday.
Meanwhile, the deadly earthquake and resulting tidal waves that struck various parts of Asia on Sunday, killing more than 22,000 people, has had minimal impact on the crude markets.
The quake hit locations where there is little crude or natural gas production, although recovery efforts in the affected areas might lead to a marginally higher demand for supplies.
"Recovery processes require heavy equipment and machinery and the demand for petroleum stocks will probably go up," said Ramasamy.
London's International Petroleum Exchange, which trades the Brent crude contract, remained closed Tuesday. It will reopen Wednesday.