Crude Oil Tops $60 on Snowstorm Forecast

Crude-oil prices spiked to settle near $60 a barrel Monday amid reports that a snowstorm would hit the U.S. Northeast, the world's largest heating fuel market, and boost demand for crude oil and natural gas.

Light, sweet crude for January delivery gained 59 cents to settle at $59.91 a barrel on the New York Mercantile Exchange, after soaring as high as $60.80.

Heavy snow had reached Washington, D.C., at the close of trading Monday, and said the season's first big snowstorm would head north through the Mid-Atlantic states to New England by Tuesday.

"The bulls are back in the market with just a little bit of cold weather," said energy analyst Victor Shum of Purvin & Gertz in Singapore.

"Refineries will have to run hard to produce heating oil to meet demand" as winter kicks in, Shum said. "This chews up more of the crude, which in turn drives up crude prices."

However, energy prices slipped in late trading from earlier highs as traders took profits, said Phil Flynn, analyst at Alaron Trading Corp. in Chicago, on indications from members of the Organization of Petroleum Exporting Countries that the group will maintain output.

Nymex heating oil fell nearly 2 cents to settle at $1.7896 a gallon after rising as high as $1.8330, while gasoline slipped about 2 cents to settle at $1.5898 a gallon, down from its intraday high of $1.6390.

Natural gas futures fell 27 cents to $13.66 per million British thermal after rising as high as $14.450, above their Oct. 25 record settlement of $14.338 but below their intraday trading record of $14.75 reached in early October.

Still, overall sentiment of energy markets right now is bullish, Flynn said, especially as oil capacity and production remains strained while U.S. economic indicators have been suggesting that U.S. oil demand will jump.

"You worry about the oil that's going to feed that spurt," Flynn said.

Last week, the Energy Information Administration said inventories of crude oil fell by 4.2 million barrels to 317.6 million barrels in the week ended Nov. 25 from the previous week, and inventories of natural gas — commonly used in homes in the U.S. Midwest — fell by 49 billion cubic feet to 3.225 trillion cubic feet.

Traders are also looking ahead to the Organization of Petroleum Exporting Countries meeting in a week's time in Kuwait. Most analysts are not expecting OPEC to cut output when it meets. Typically, the organization considers cutting output when stocks start building and prices fall.

Looking toward Russia, a major non-OPEC supplier, PVM Oil Associates in Vienna noted production there — at a daily 9.63 million barrels for November — was the "highest oil output in post-Soviet history."

Crude futures are about 16 percent below their all-time high of $70.85 in late August after Hurricane Katrina battered the Gulf Coast.