Jan 25, 2005 3 min read

VIENNA, Austria (AP) – Crude oil futures closed in on $49 a barrel Monday as traders kept an eye on the possibility of another OPEC production cut, turmoil in Nigeria and violence in Iraq ahead of the election. Prices reversed course after falling early in the day in what appeared to be profit-taking after last week’s sharp move higher and as forecasters called for near-normal temperatures in the week ahead.

Light sweet crude for March delivery rose 28 cents to settle at $48.81 a barrel on the New York Mercantile Exchange. Oil futures are nearly 40 percent higher than a year ago.

In other Nymex trade, February heating oil futures were up 1.95 cent to $1.4032 per gallon, natural gas futures climbed 23.6 cents to $6.476 and gasoline futures were down less than a penny at $1.299 per gallon.

Brent crude rose 28 cents to $46.01 a barrel on the International Petroleum Exchange.

“Certainly, the cold weather in the U.S. is a factor driving up prices to close to $50 a barrel,” said Victor Shum, oil analyst at Purvin & Gertz, an energy consulting firm.

But weather forecaster Meteorlogix said the weather is expected to return to near-normal conditions by Tuesday.

Oil analyst Deborah White of SG Securities in London said that even before the big chill in the U.S. Northeast, markets were nervous about the Iraqi elections and the ministerial meeting of the Organization of Petroleum Exporting Countries in Vienna, both on Jan. 30.

Iran, a price hawk, on Monday appeared to come out against further production cutbacks, easing some concerns about the Vienna meeting.

OPEC has acted on its decision in December to cut production by 1 million barrels a day to its self-imposed daily target of 27 million barrels. This has contributed to a 20 percent price gain in oil futures.

In Iraq, insurgents have stepped up attacks as the election approaches and sabotage has halted exports from Iraq’s northern oil fields around Kirkuk for more than a month. Partially because of the potential for unrest, Iraqi oil minister Thamer al-Ghadhban said Monday he would not be attending the Vienna meeting.

In some good news from Iraq, a shipping agent said the country had resumed shipping oil from its southern terminals after a weekend stoppage caused by a power failure and strong winds. The agent, who asked for anonymity, said the Basra oil terminal was loading oil Monday at a rate of 78,000 barrels per hour – about the normal rate.

But the insurgency, not the weather, has been the biggest problem – Iraqi oil officials say the sabotaging of pipelines has cost the country billions of dollars in export earnings.

Iraq’s annual average export level has fallen below the target of 1.85 million barrels a day because of the insurgency. Last month, oil officials said exports averaged 1.55 million barrels a day in 2004.

With OPEC and Iraq both having potentially bullish effects on the market, Shum said crude futures prices will remain high until at least until Jan. 30.

Supply fears have also driven oil prices higher. Oil workers in Port Harcourt, a key Nigerian petroleum center, have threatened to go ahead with a strike planned Monday unless two expatriate oil executives blamed for cutting worker benefits heed their call to leave the country.

The strike could cut Nigeria’s output by more than 500,000 barrels per day and shut down one of the country’s four oil refineries.

Nigeria is Africa’s largest oil exporter and the fifth-largest supplier of crude to the United States.

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Associated Press Writers Wee Sui Lee in Singapore and Rawya Rageh in Dubai contributed to this report.

AP-ES-01-24-05 1540EST