Crude prices up slightly as supply concerns outweigh slower demand caused by U.S. snowstorm

Monday, January 24th 2005, 9:27 am
By: News On 6

LONDON (AP) _ Crude oil futures prices rose above $49 a barrel Tuesday on concerns about the forthcoming Iraqi elections, terrorist threats to Middle East oil installations, Sunday's OPEC meeting and a potential oil-worker strike in Nigeria.

Light sweet crude for March delivery was up 64 cents at $49.45 a barrel in afternoon trade on the New York Mercantile Exchange. Heating oil for February delivery rose 1.58 cent to $1.419 per gallon.

In London, Brent for March delivery was 2 cents higher at $46.03 a barrel on the International Petroleum Exchange.

Analysts said the cold spell in the U.S. Northeast was having a mixed effect on markets. While the snowstorm has increased demand for heating oil, the freeze on transportation networks has weakened demand for transportation fuels.

In Nigeria, oil unions refused to retract a strike threat after talks with Labor Ministry officials, but said meetings aimed at averting the work stoppage in the world's seventh-largest crude exporter would continue Wednesday. The unions initially said they would launch a regional strike Monday in and around the southern Niger Delta oil hub of Port Harcourt after two executives from drilling firm WASCO ignored the unions' ultimatum demanding they leave the country.

OPEC ministers, meantime, are scheduled to meet Jan. 30 to discuss whether additional production cuts may be necessary. Some members have suggested, however, that the current high prices might mean that the group may not cut output quotas, easing the market slightly.

Kuwait believes OPEC should maintain its oil production ceiling of 27 million barrels a day, the country's oil minister, Sheik Ahmed Fahd Al Ahmed Al Sabah said Tuesday. Sheik Ahmed, who currently holds the OPEC presidency, emphasized he was speaking in his capacity as oil minister of Kuwait.

Iranian oil minister Bijan Zanganeh said Monday that OPEC preferred to keep the price of its reference crude basket _ last valued at $41.63 a barrel _ below $40.

OPEC agreed in December last year to cut production by 1 million barrels a day starting this month to bring output closer to 27 million barrels a day. The group is eager to avoid an excessive stock build during the second quarter, when demand ebbs after the northern winter.