22 January 2007, 13:19  Oil climbs towards $53

Oil rose towards $53 on Monday after falling temperatures in the U.S. Northeast spurred investor buying ahead of higher fuel demand in the top heating oil consumer region. U.S. crude for February climbed 36 cents to $52.35 a barrel by 0807 GMT, after a high of $53.05, as the market extended Friday's gains of $1.51. London Brent for March delivery was up 41 cents at $53.85. Traders said there was stronger buying on U.S. front-month February, ahead of the contract's expiry on Monday. "There's some last minute shorts panic buying," said Tony Nunan of Mitsubishi Corp.'s risk management unit. "There was a strong bounce off $50 -- there are a couple of signs the market may have bottomed." Temperatures in the U.S. Northeast were expected to average below normal for the next six-to-10 days, private forecaster DTN Meteorlogix has said, adding that temperatures in European cities will mostly drop in the next few days. "Weather is definitely playing a role in pushing up prices. The cold weather has increased demand in the U.S. and investors are looking for the cold snap to reach Europe as well," said Gerard Burg, an analyst at National Australia Bank. Oil prices have nosedived about 14 percent since the start of the year and are well down on the July record of $78.40 on fund selling and mild U.S. weather. After hovering marginally above the psychologically important $50 level for about a week, prices tumbled to $49.90 on Thursday after a government report showed U.S. crude stocks had swelled by 6.8 million barrels. Analysts said support came from comments from OPEC members Algeria and Libya on Sunday that oil prices should rise when the cartel fully implements its output reduction by February. Algeria's Energy and Mines Minister Chakib Khelil told state radio that OPEC would not hold an emergency meeting to implement further output cuts because of opposition from Saudi Arabia. Libya's top oil official Shokri Ghanem said OPEC members were seeking full compliance with existing output cutbacks to stem the slide in oil prices, but would call for an extraordinary meeting to shore up sagging prices if that fails. OPEC is next scheduled to meet on March 15 in Vienna. An OPEC monthly report on Friday said 10 members involved in output curbs had pumped 26.785 million barrels per day (bpd) in December, 111,000 bpd less than November, but still above a 26.3 million-bpd target. OPEC has trimmed production twice since November in an attempt to curb the steady fall in oil prices. The cartel first pledged to implement a 1.2 million-barrel cut from Nov. 1 and later added a further 500,000 bpd cut from Feb. 1.

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