Looks good for ARET!Oil Tops $36 in U.S. on Cold, Algeria Blast
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NEW YORK (Reuters) - U.S. oil prices hit new 10-month highs on Tuesday as a huge blast at a liquefied natural gas (LNG) plant in Algeria added to concerns about wafer-thin U.S. oil supplies being tested amid bitter winter cold.
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The explosion in Algeria -- the world's second largest LNG exporter -- closed the OPEC (news - web sites) member's largest refinery and main oil export terminal. It has delayed shipment of some cargoes.
U.S. light crude futures for February delivery hit a new 10-month high, settling at $36.20 a barrel, up nearly 3.2 percent and at its highest level since the U.S. invasion of Iraq (news - web sites) in March. London Brent crude futures for March rose 65 cents to last trade at $31.22 a barrel.
"Energy markets continue to take support from a strong fundamental picture, with OPEC statements and a deadly blast at the Skikda LNG plant in Algeria adding fresh price-positive news," said Barclays Capital in a market comment.
Prices marched higher after the Algerian explosion, which ripped through the vast petrochemical plant in the port city of Skikda on Monday, killing at least 23 people and shutting down all activity at the oil and gas refinery complex.
Energy and Mines Minister Chakib Khelil said operations had been shut as a preventive measure and a shipping agent said all oil shipments from Skikda had been halted.
Officials believed a boiler at one of the gas units was the origin of the blast, which was felt for kilometers and destroyed three LNG trains.
Traders said the Algerian situation, combined with the threat of a general strike brewing in fellow OPEC member Nigeria, and the continuing freezing temperatures in the United States, were supporting prices.
Meteorologists are forecasting extreme cold for the next three weeks in the United States east of the Rocky Mountains, with at least one forecaster, Joe *******i of AccuWeather, calling for the coldest winter there in 25 years.
U.S. crude prices have shot up more than $8 a barrel, or 30 percent, since late September when OPEC agreed to cut official output limits by 900,000 barrels per day.
Since then, demand has risen with the onset of the Northern Hemisphere winter and U.S. fuel inventories have fallen to their lowest since the mid-1970s.
Saudi Arabia has said it is too early to forecast what action OPEC will take when it reviews production policy at its next meeting on Feb. 10 in Algiers. On Tuesday Qatar said the cartel should not rush to set its output level.
OPEC is worried that a big overhang of oil will trigger a collapse in prices in the second quarter when demand normally tails off at the end of winter. It is already pumping about 1.5 million bpd above its official ceiling of 24.5 million bpd, which excludes Iraq output.
The International Energy Agency, the energy watchdog for 26 rich nations, last week forecast a huge rise in second-quarter oil stocks if OPEC did not cut supplies from December.
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