Oil futures prices climbed above $46 a barrel Wednesday after the U.S. government reported that commercial inventories of crude and heating oil fell last week and as traders considered the effect of global supply snags and forecasts calling for colder weather.

Light crude for February delivery climbed as high as $46.60 per barrel before settling at $46.37 per barrel, an increase of 69 cents on the New York Mercantile Exchange (search).

The possibility of further OPEC (search) production cuts, persistent disruptions in North Sea crude production and output problems in Iraq also acted as a spark to nudge prices upward. So did a forecast earlier in the week calling for colder weather next week in the U.S. Northeast, the region that consumes the most heating oil.

"We'll have to see where demand goes from here," Larry said.

Brent crude for February delivery rose 56 cents to $43.68 per barrel on the International Petroleum Exchange.

The Department of Energy (search) reported Wednesday that the nation's supply of crude oil declined by 3 million barrels last week to 288.8 million barrels, leaving inventories 7 percent higher than a year ago.

The supply of distillate fuel, which includes heating oil, diesel and jet fuel, rose by 1.9 million barrels, though inventories are 8 percent below a year ago at 123 million barrels. The supply of high-sulfur distillate used for heating oil fell by 500,000 barrels to 49.6 million barrels, or 7 percent lower than last year.

Tom Bentz, a broker at BNP Paribas Commodity Futures in New York, said the government report was basically in the range of the market's expectations.

While crude is priced well below the October peak above $55 a barrel, Nymex futures are trading roughly 33 percent higher than a year ago and, as a result, U.S. consumers are paying more for vehicle and home-heating fuel than they did at the start of 2004.

The average retail price of gasoline in the United States is $1.79 per gallon, or 15 percent more expensive than last year, according to the Energy Department. The average retail price of heating oil is $1.95 per gallon, an increase of about 30 percent from last year.

February heating oil futures rose less than a penny to $1.3004 per gallon on Nymex, where gasoline futures climbed less than a penny to $1.2185 per gallon and natural gas futures fell 15.2 cents to $5.943 per 1,000 cubic feet.

Venezuelan Oil Minister Rafael Ramirez said Tuesday that the Organization of Petroleum Exporting Countries might decide on further production cuts at its next meeting in Vienna on Jan. 30.

But Victor Shum, oil analyst at energy consulting agency Purvin & Gertz, said that was unlikely if "prices continue to stay at this present level."

Deborah White of SG Securities in Paris said "some of the OPEC ministers have sent signals that they'd like defend prices at $35 a barrel" — statements that tend to support crude at present levels.

Saudi Arabia's announcement earlier this week of 10 percent contract cuts for February delivery was seen as signal that producers were looking to avoid gluts for the traditionally lighter second quarter, she said.

Unsettled weather in the North Sea meant continued production shortfalls of about 345,000 barrels a day from Norway, while sporadic shipping shutdowns in the Bosporus and the Dardanelles straits in Turkey due to fog were also disruptive, White said.

In Iraq, ongoing sabotage in the north has prevented exports from the Kirkuk oil fields to the Turkish port of Ceyhan. Flows through the line have been halted since it was attacked Dec. 18.

OPEC officials in Vienna said the organization was going ahead with its Jan. 30 meeting despite a request for postponement from Iraq, which is holding its first post-war elections on that date.