Oil prices surge into new year

Gulf leaders have urged a cut in oil production

Crude prices surged into 2001, as the world's biggest oil exporter demanded action to support prices, and the US cold snap dumped one foot of snow on New York.

In London, the price of Brent crude initially soared more than $1 a barrel after Saudi Arabia urged the producers' organisation Opec to back an output cut of 1.5 million barrels a day.

The call followed a meeting of Gulf states over the weekend which backed action to underpin oil prices.

A barrel of Brent crude for February delivery came within range of $25 a barrel on Tuesday before slipping to $24.35, a closing price 48 cents above Friday's closing price of $23.87.

In New York, the price of Nymex (New York Merchantile Exchange) crude reached $27.40 a barrel before settling at $27.40, a gain of 41 cents or 1.5% on the day.

Nymex oil prices in 2000 averaged $30.20 a barrel, the highest level since 1983, and well above the 1999 average of $19.25.

Snowfall

The oil price was also supported by cold weather in the US, which traders said would boost demand for crude.

Temperatures in north eastern states, which received their first snow of the winter over the weekend, will fall five to 10 degrees below normal on Tuesday, official weather forecasters said.

Central states, recovering from storms on Christmas Day, were hit by snow on Monday.

Opec's basket

Traders also saw support for the oil price from the Opec basket of seven crude oils which stood at $21.75 a barrell on 29 December 2000.

That was the seventh day the price stayed below a preferred range of $22-$28 a barrell.

Under an Opec price stability measure, output will be cut by 500,000 barrels a day if the basket price stay below $22 for more than 10 days.