High-flying oil prices held firm on Monday as a blizzard enveloping the U.S. Northeast strained tight heating oil stocks.

U.S. light crude stood 7 cents higher at $48.60 a barrel on the New York Mercantile Exchange (search), building on Friday's $1.22 rally. London Brent crude eased 2 cents to $45.71 a barrel after touching its highest level since November 30 in early trade.

Crude prices have threatened to breach the $50 level faced with threats to Iraqi oil flows ahead of Sunday's elections and speculation that OPEC's (search) ministerial meeting the same day could yield an output cut.

"The organization's decision, and the rumors that leak out before it is officially announced, could be a key factor in determining if prices do finally break over $50 or continue trading in the upper $40s," analysts at Washington-based PFC energy said in a market comment.

Prices have climbed as blizzards blanketed large parts of the Northeast, the biggest regional heating oil market in the world, pulling temperatures well below the seasonal average, driving homeowners to fire up their furnaces.

The temperature in the Northeast is expected to remain well below normal for the rest of the week, but the outlook for the following week is warmer, forecasters Meteorlogix (search) said on Monday.

Traders worry that the freeze may drain heating fuel stockpiles that remain below year-ago levels, despite an unusually warm first half of the northern hemisphere winter.

Oil dealers fear that sabotage on Iraq's oil infrastructure may escalate in the days leading up to or following the January 30 election.

Any additional disruption to Iraqi exports would add to pressure on global supply, which is still grappling with outages of nearly 500,000 barrels per day (bpd) from Nigeria, Norway's North Sea, the U.S. Gulf of Mexico and Canada.

OPEC ministers said on Monday that strong prices mean their Jan. 30 meeting may be able to resist cutting output, even though world supplies are running in excess of demand.

"On our oversupply there are different figures, but everyone agrees there is oversupply. But this does not mean we're going to cut (production)," said Iran's Oil Minister Bijan Zanganeh.

Zanganeh said that OPEC preferred to keep the price of its reference crude basket — last valued at $41.63 a barrel — below $40.

Indonesia's Oil Minister Purnomo Yusgiantoro said on Monday current price strength means OPEC should maintain existing production limits at Sunday's meeting.

OPEC is keen to avoid an excessive stockbuild during the second quarter when demand ebbs after the northern winter. The cartel's latest forecast projected that stronger-than-expected demand growth should help keep inventories under control.