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Last Updated: Monday, 5 December 2005, 14:27 GMT
Oil up as winter weather hits US
Winter scene in Boston
Boston has seen heavy snowfall
Oil prices have briefly risen above $60 a barrel as snowstorms in the US North East boosted demand for heating oil.

US light crude touched $60.08 on Monday before slipping back to $59.96, while Brent crude rose 84 cents to $57.89.

Arctic weather in the US North East has pushed the price of heating oil, used to heat most homes, close to record levels.

The increase came despite a promise by oil cartel Opec to keep pumping petroleum at maximum capacity.

Meeting demand

Oil prices remain well below the historic peak of $70.85 reached in late August.

But with the cold weather set to continue they remain 40% above the level seen at the start of 2005.

Refineries will have to run hard to produce heating oil to meet demands
Victor Shum, Purvin & Gertz

Boston and New York have seen their first snow of the winter and further snowstorms are forecast for Monday along the eastern seaboard.

"The bulls are back in the market with just a little bit of cold weather," Victor Shum, from oil analysts Purvin & Gertz, told the Associated Press news agency.

"Refineries will have to run hard to produce heating oil to meet demands. This chews up more of the crude, which in turn drives up crude prices."

The pressure on oil means the 11-nation Opec producers' group is unlikely to scale back output when it meets in Kuwait on 12 December.

Production is already two million barrels a day beyond the 28 million barrel quota.

As well as reassuring markets that production would not flag, Opec president Sheikh Ahmed Fahd Al Ahmed Al Sabah said oil importing states had to build refinery capacity, a problem especially in the US.

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