Oil Prices Hover Above $61 a Barrel

Tuesday, November 1st 2005, 7:22 pm

By: News On 6

VIENNA, Austria (AP) _ Oil prices pulled back Friday after jumping more than $2 a barrel a day earlier on buying that reflected expectations of higher fuel demand ahead of the Northern Hemisphere winter.

Analysts said oil would likely trade in a narrow band over the coming weeks, pulled between the diminishing belief that demand was low and the mild weather in Europe and the United States.

Light, sweet crude for December delivery fell 73 cents to $61.05 in midday trading on the New York Mercantile Exchange.

December Brent crude futures on London's ICE Futures exchange tumbled 71 cents to $59.81 a barrel.

``It's moving up and down,'' said Kevin Norrish, head of commodities research at Barclays Capital in London. ``We've got an erosion of the idea that there has been massive demand destruction while ... at the same time you have got some pretty mild weather on both sides of the Atlantic.''

Commenting on Thursday's upswing, commodities analyst Mark Pervan of Daiwa Securities in Melbourne, Australia, said the market was likely getting past the so-called shoulder season of weak demand between the end of the summer driving season and the start of winter.

``We're now starting to see that demand is steadily improving,'' Pervan said. ``There's going to be stronger demand for heating oil and crude futures are starting to reflect that.''

Crude futures also rose Thursday on U.S. Federal Reserve Chairman Alan Greenspan's assessment of the U.S. economy even as he sounded an alarm about the dangers that budget deficits pose to the country's long-term health.

Greenspan said damage along the U.S. Gulf Coast from hurricanes Katrina and Rita will hurt U.S. economic growth in the near-term, but ``the economic fundamentals remain firm, and the U.S. economy appears to retain important forward momentum.''

But Greenspan also said U.S. home heating costs are expected to be much higher this winter than a year ago.

December heating oil futures fell more than 3 cents to $1.7975 a gallon and gasoline futures dropped more than 2 cents to $1.606 per gallon.

Concerns remain that U.S. output of oil and natural gas remains constrained by hurricane-related damage to platforms and pipelines.

In the U.S. Gulf area, three refineries remain shut: BP PLC's 437,000-barrel-per-day plant in Texas City, Texas, ConocoPhillips' 225,000-barrel-per-day plant in Belle Chasse, Louisiana, and Murphy Oil Corp.'s 125,000-barrel-per-day plant in Meraux, Louisiana.

The U.S. Minerals Management Service said Thursday that 52 percent of daily oil production and 47 percent of natural gas production in the Gulf of Mexico remained off-line, slightly lower than Wednesday.

Still, the warm weather appeared to be more of a factor on December natural gas futures, which fell more than 31 cents to $11.372 per 1,000 cubic feet.