Weather leads to rise in oil, gas prices
Saudi Arabia is going to cut oil supply, a report said.
NEW YORK (AP) -- Oil prices settled just below 57 a barrel Tuesday -- a gain of almost 3 -- and natural gas soared more than 11 percent on expectations of more Arctic weather in the U.S.
Renewed concerns about OPEC production cuts also bolstered oil prices.
Light, sweet crude for March delivery jumped 2.96 to settle at 56.97 a barrel on the New York Mercantile Exchange. Prices reached as high as 57.05 during trading before falling back.
Meanwhile, natural gas soared more than 80 cents, or 11.6 percent, to settle at 7.74 per 1,000 cubic feet on the Nymex.
"People were digging their spurs into it. This is just a lot of people running to get out of the way of the rally," said Tim Evans, energy analyst at Citigroup Global Markets "There wasn't a lot of foresight, not a lot of calculation to it. It's just a reaction to the cold weather."
Seven-day forecasts Tuesday predicted temperatures to dip below zero in the Midwest, the heart of the natural gas market, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
"That's just driving the natural gas market up dramatically," Flynn said. "And it's leading the way up."
Colder-than-normal temperatures are also expected through mid-February in the Northeast, which is responsible for 80 percent of the country's heating oil consumption. Heating oil rose nearly 9 cents to settle at 1.63 a gallon.
Crude oil also received a boost Tuesday from a Wall Street Journal report that said Saudi Arabia has told its customers it will cut supply by a further 158,000 barrels a day, effective Thursday.
"After these cuts, our oil production will have declined by about 1 million barrels a day since last summer," a senior official said, according to the newspaper.