Oil prices rise above US$61 a barrel as winter storm plows across U.S.

Oil prices rose Monday as a winter storm plowed across the United States, spurring expectations of strong demand for heating oil.

Photo: Oil prices rise above US a barrel as winter storm plows across U.S.

The storm dumped as much as 2 feet (60 centimeters) of snow in the Midwest, grounding hundreds of airline flights and closing major highways. The National Weather Service said New York and northern New Jersey might get up to 6 inches (15 centimeters) of snow.

"Oil prices have been driven by the weather as what is perhaps the last winter storm of the year passes through the U.S. Midwest toward the East Coast, driving strong demand in heating oil," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Light, sweet crude for April delivery rose 39 cents to US$61.53 a barrel in electronic trading on the New York Mercantile Exchange at midday in Europe. Friday's closing price of US$61.14 was the highest since Dec. 22.

April Brent crude on London's ICE Futures exchange rose 50 cents to US$61.38 a barrel.

Heating oil prices gained 0.78 cent to US$1.7583 a gallon while natural gas futures rose 10.5 cents to US$7.860 per 1,000 cubic feet.

Oil prices also were supported by U.S. inventory figures released last Thursday that showed a larger-than-expected decline in distillates, which include heating oil and diesel, as well as a drawdown in gasoline inventories.

Shokri Ghanem, the head of Libya's oil industry, said Monday that he sees U.S. oil prices remaining close to US$60 a barrel for the rest of 2007.

"The price will hover around US$60 per barrel, maybe moving up or down slightly, for the rest of the year," Dow Jones Newswires quoted him as saying from his office in Tripoli.

Market participants reacted slightly to news that Iranian President Mahmoud Ahmadinejad said Sunday his country's disputed nuclear program was irreversible. Iran, OPEC's No. 2 supplier, also said it successfully tested a rocket that went into space, reports AP.

"The market has largely factored in the geopolitical threat posed by Iran, therefore you don't see a sharp rise in prices," Shum said.

Senior diplomats from the five permanent U.N. Security Council nations and Germany were meeting Monday in London to start work on a new resolution to try to pressure Iran to suspend its uranium enrichment program, which can lead to the production of nuclear weapons.