Updated from 11:14 a.m. EST
Crude futures pushed further past $60 Tuesday, buoyed by forecasts of colder weather in the Northeast this weekend and expectations of another OPEC cut in production.
Light, sweet crude for January delivery climbed 67 cents to settle at $60.99 a barrel. The rest of the energy sector was also perking up, with heating oil advancing 2 cents to $1.72 a gallon and unleaded gasoline jumping 3 cents to $1.62 a gallon.
Natural gas for December delivery picked up 32 cents to $8.31 per million British thermal units. Trading of the front-month contract was a bit choppy because the contract expired today.
The Northeast, the country's largest user of heating oil, has been enjoying warmer-than-average temperatures this week and thus reduced heating demand. Milder temperatures have helped keep distillates, including heating oil, above last year's levels. But that surplus could easily disappear once the weather turns cold. As it is, stockpiles have plunged for the past seven weeks straight and are now only 3% above last year's levels.
But refiners are expected to have increased production of distillates last week as they finished seasonal maintenance. In the fall and spring, refiners often shutter some units for repairs before the peak fuel making periods. Analysts polled by
expect supplies of distillates to have climbed by 500,000 barrels and gasoline by 450,000 barrels last week.
Refining capacity likely inched up by 0.6% to 87.8% and crude stockpiles probably fell by 350,000 barrels. As gasoline and distillate supplies rise, inventories of crude, which is processed into a variety of fuels, typically falls.
An attack on an Iraqi oil-processing facility and a suggestion from the Saudi oil minister of more production cuts pushed oil prices up by over $1 on Monday. The Organization of the Petroleum Exporting Countries may trim production again when it meets Dec. 14, since prices have not risen as much as members had expected.
"We may take action to reduce production if we see the data indicating the supply still (more) excessive than demand," Saudi oil minister Ali al-Naimi told
The cartel, which pumps 40% of the world's crude, opted in October to reduce daily output by 1.2 million barrels in an effort to boost prices. But since then, prices have been locked between $58 and $61 and have not stayed above $60 as members had hoped.
Still, some traders and analysts believe that not all of OPEC's members have gone along with the cut. The U.S. Energy Department estimates that OPEC will shave total output by at most 800,000 barrels per day, and not the 1.2 million barrels the group had agreed to. Member countries stand to lose millions of dollars in oil revenues if they rein back output, a move some are not willing to do.
Europe and the U.S. were still trying to slap trade sanctions against Iran, an OPEC member, over its refusal to stop its nuclear program. France, Germany and Great Britain drew up a new resolution against Iran in reaction to Russian demands for weaker sanctions. U.N. Security Council members were expected to meet this week to discuss the new draft. If a trade embargo was imposed on Iran, one of the world's top crude producers, Tehran might retaliate and cut crude exports, a move that would likely boost oil prices to new record highs.
Meanwhile, energy shares were following crude higher, with the Amex Oil and Philadelphia Oil Service Indices up by at least 1.5%.
were leading advancers on the Amex Oil Index, up by as much as 4.8%.
Among oil-service firms,
National Oilwell Varco
were gaining the most ground, up by about 3% each.