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 to be seen, 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 question is, what is the million barrels a day based on?" said Tom Bentz, a broker at BNP Paribas Commodity Futures in New York.
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 and now just a few pennies above the price at the start of the year.
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.
In a sign of how wide prices can vary nationwide, the average cost of gasoline in Hawaii is still more than $3 a gallon, Kloza said.
But it is home-heating, not transportation, fuels that led oil prices on 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 nonmember 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.
Elsewhere, Norwegian safety authorities on Monday allowed Norske Shell ASA to restart its 80,000 barrel-per-day Draugen offshore oil platform after a new review of lifeboat problems. Shell had been forced to shut down the platform Friday after authorities rejected its application for a dispensation from lifeboat rules.
Nymex gasoline futures fell a quarter of a cent to $1.4659 a gallon.