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Oil Prices Surge Above $60 Per Barrel

Updated:
LONDON (AP) _ Oil prices surged above $60 a barrel Monday as OPEC agreed to maintain its present production levels amid anticipation that energy demand would grow as colder weather grips the northeastern United States, the world's largest heating oil market.

Explosions at an oil terminal north of London on Sunday also raised supply concerns, but authorities said the blasts will not lead to a shortage.

Light, sweet crude for January delivery on the New York Mercantile Exchange rose 77 cents to $60.16 a barrel in electronic trading by afternoon in Europe. January Brent crude at London's ICE Futures exchange rose $1.09 to $58.40 a barrel.

Oil ministers from the Organization of Petroleum Exporting Countries agreed Monday to keep oil spigots open and maintain production at the group's highest-ever levels _ at least for now.

The widely expected decision was reached at Monday's OPEC ministerial policy and production meeting and made public by Libyan Oil Minister Fathi Hamed Ben Shatwan. But the group reserved the right to consider cuts in early 2006 should robust demand flag and high prices fall.

Meanwhile, a snowstorm was forecast to hit the northern region of the United States on Wednesday, according to Accuweather.com meteorologist Jon Mabry in a report Sunday.

In recent weeks, oil prices have been dictated largely by weather patterns in the U.S. northeast, which consumes about three-quarters of the country's heating oil. Spells of warmer weather have depressed prices, while forecasts for cold snaps have raised them.

``Forecasters have predicted that weather in the U.S. Northeast, the world's largest heating oil market, will be near to below normal for the next 10 days, meaning that demand for heating oil will increase,'' said analysts at Sucden Commodity brokers in London.

Nymex heating oil gained a cent and a half to $1.7470 a gallon, while gasoline gained more than 2 cents to $1.6250 a gallon. Natural gas rose almost 49 cents to $14.800 per 1,000 cubic feet.

Traders were concerned about the damage caused by massive blasts at the Buncefield terminal north of London on Sunday, which prompted panic buying of gasoline at local stations, causing long lines.

The depot, which is the fifth-largest oil storage facility in Britain, holds reserves accounting for about 5 percent of the country's oil supply _ or 4 million gallons of gasoline, diesel, kerosene and aviation fuel.

But oil experts said the accident was not expected to prompt a fuel shortage.

``People are worried about the possibility of a supply disruption, but if we look at our inventories of crude, gasoline, diesel, they're not very tight,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, adding that Monday's jump in prices was likely a knee-jerk reaction to the blasts.

French oil company Total SA, which operates the Buncefield depot, said it had already put in place contingency plans to re-route supplies that normally run through the plant.

``There shouldn't be any problem with supplies,'' said Lesley Else, a spokeswoman for Total U.K. ``Everyone is working together to ensure minimal disruption.''
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