Jan 28, 2005 2 min read

By Jane Wardell AP Business Writer

LONDON (AP) – Crude oil futures prices rose Thursday amid worries there could be more violence in advance of elections in Iraq on Sunday and uncertainty about the outcome of a weekend OPEC meeting.

Light, sweet crude for March delivery rose 57 cents to $49.35 a barrel on the New York Mercantile Exchange. February heating oil was up 1.77 cent at $1.4210 a gallon.

Brent for March delivery rose 41 cents to $46.92 a barrel on the International Petroleum Exchange in London.

Traders said the market was most nervous about the Iraq elections as pressure eased over the meeting of ministers from the Organization of Petroleum Exporting Countries, following comments from several key players that the group is unlikely to cut output quotas.

Hani Hussein, chief executive of the Kuwait Petroleum Corp., has said the group was likely to hold steady given the high oil prices. Iranian oil minister Bijan Zanganeh said OPEC preferred to keep the price of its reference crude basket – last valued at $41.63 a barrel – below $40.

OPEC is eager to avoid an excessive stock build during the second quarter, when demand ebbs after the Northern Hemisphere winter. The U.S. National Weather Service said this week that temperatures in the northern half of the United States will exceed the seasonal average from Jan. 31 through Feb. 4.

Data released by the U.S. Energy Information Administration on Wednesday showed crude stocks rising 3.4 million barrels to 295.6 million barrels for the week ending Jan. 21. Crude stocks are now about 9 percent, or 25 million barrels, higher than last year.

Distillate inventories, including heating oil, fell as expected by 2.3 million barrels to 121.6 million barrels, following the cold spell in the U.S. Northeast.

“My expectation is that between now and Jan. 30, it’s going to remain at the high US$40 level,” said Victor Shum, analyst at Purvin & Gertz, an energy consulting firm.

The market will remain nervous ahead of Jan. 30, Shum added, because “OPEC could pull a surprise anytime.”

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Associated Press Writer Wee Sui Lee in Singapore contributed to this report.

AP-ES-01-27-05 1111EST