Oil Prices Hold Strong Near $52

Oil Prices Hold Strong Near $52

Tue Mar 1, 5:16 AM ET Business - Reuters

LONDON (Reuters) - High-flying oil prices held just below recent four-month peaks on Tuesday as cold U.S. weather drove heating oil demand.

U.S. light crude futures shed 9 cents to $51.66 a barrel just below a four-month peak of $52.28 struck on Monday. London Brent crude was down 11 cents at $49.95 a barrel.

Prices held strong as industry analysts predicted on Monday that U.S. distillate supplies fell for the sixth week running last week in the face of frigid weather in the U.S. Northeast.

The U.S. government will release its weekly inventory report on Wednesday. Heating oil supplies are already 7 percent below year-ago levels.

U.S. demand for heating oil was expected to rise about 14 percent above normal this week as a major winter storm ran the length of the East Coast, the U.S. National Weather Service said.

A softer dollar has also attracted an influx of speculative fund money that has helped send oil prices soaring by more than $5 in less than three weeks.

But oil prices above $50 have led OPEC oil producers to back away from talk of a possible output cut for the second quarter.

"The fact that we have over $50 oil may be softening the need to consider a cut," Shihab-Eldin OPEC's acting Secretary-General Adnan Shihab-Eldin told Reuters on Tuesday.

Kuwait, Qatar, Venezuela and Indonesia have come out in favor of keeping OPEC's formal output limits unchanged when the cartel meets in Iran on March 16.

Shihab-Eldin has said the group sees a growing consensus that a $40-50 range is sustainable, backing up comments by Saudi Oil Minister Ali al-Naimi last week that prices could stay in that range this year.

Kuwait's Prime Minister Sheikh Sabah al-Ahmad al-Sabah has vowed to do all he could within OPEC to bring oil prices under control and has said high prices were not in Kuwait's long-term interests.

On the supply side, Iraq will restart crude oil exports from the northern pipeline to Turkey within 10 days, an oil official said on Monday.

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