Cold weather, tightening supplies support crude oil prices

Crude oil prices were higher on Monday as forecasts for cold weather in the US Northeast and Midwest continued. The forecasts have analysts expecting demand for heating by both heating oil and natural gas to 20 percent higher than is normal for this time of year. Brent crude for March delivery was up 20 cents to $58.61 per barrel, while March contracts for West Texas Intermediate crude added 16 cents to $59.18 per barrel on the New York Mercantile Exchange. In addition, Nymex March heating oil was a bit over 1 cent higher to $1.6943 per gallon, while natural gas gained nearly 24 cents to $7.715 per million British thermal units.

It is expected that the oil market will tighten as new production cuts by Organization of Petroleum Exporting Countries member nations come into effect. In addition, Saudi Arabia has reduced the price discount in relation to Brent crude at which it sells its Arab crude to customers. This decline in the discount is seen as yet another move to tighten supplies. Meanwhile in Nigeria, a threatened strike over the safety of working conditions has been postponed until after a meeting with the nation’s president to discuss the issue.