SINGAPORE, Jan 6 - Oil prices hovered near nine-month highs on Tuesday, underpinned by worries that a cold snap in the United States will further draw down crude inventories already running at their lowest levels in five years. Prices were further supported by expectations the oil cartel OPEC, which controls half the world's oil exports, will keep its production unchanged despite soaring prices. Oil brokers said the combination of factors would push prices higher. "Looks like we are going to break right through resistance to reach new targets at $35 and $36," a New York broker said. U.S. light crude futures prices <0#CL:> were down 15 cents at $33.63 a barrel at 0730 GMT, but holding close to Monday's peak of $33.95, the highest price since just before the U.S.-led invasion of Iraq last March. The latest drive higher in the oil price followed a forecast for a cold snap in the United States later this week. Forecaster Meteorlogix said on Tuesday arctic air would sweep into the U.S. northeast, the world's biggest heating oil market, in the next few days. Meteorlogix said on Monday temperatures in the northeast would be eight to 15 degrees Fahrenheit below normal between Wednesday and Friday, which oil dealers fear would spark fresh oil demand.
CONSUMER PAYS THE PRICE
The U.S. government said last week that the country's crude stocks were already more than 27 million barrels below the five-year average for the end of the year, and analysts said they expected crude stocks to fall further. A survey of analysts showed they expected data due on Wednesday to show crude stocks fell 500,000 barrels last week, which would mark the eighth time in the past 10 weeks that stocks had fallen. The Organisation of the Petroleum Exporting Countries has clearly signalled it will not offer any reprieve for hard pressed oil consumers, who last year had to swallow the highest average oil prices in more than two decades. Instead, several OPEC ministers have said high prices were justified given the slide in the value of the U.S. dollar, the currency of international oil trade, to multi-year lows. OPEC tries to keep a reference basket of seven crudes within a price band of $22 to $28 a barrel and the producers' group can consider increasing production if the basket price stays above the band for 20 working days. The reference price finished 2003 by staying above the top end of the price band for more than 20 consecutive working days, although an OPEC official said on Monday "no-one is expecting any change" in production. OPEC ministers are due to meet in Algiers on February 10 to review production policy. They have said they will discuss cutting their output of 24.5 million barrels per day in anticipation of a seasonal downturn in demand in the second quarter.//