Oil prices advanced Wednesday, catching up with gains made overseas during the long Christmas weekend on renewed Mideast war jitters and forecasts of cold weather.
Oil for February delivery on the New York Mercantile Exchange rose $1.30 to $27.22 a barrel, just off its session high of $27.35.
Prices rose early, playing catch-up to Monday’s gains on London’s International Petroleum Exchange. The Mercantile Exchange was closed Monday and Tuesday for the Christmas holiday. London markets shut Wednesday for Boxing Day, and traders said thin volume exaggerated New York’s gains.
A report that Iraq could launch an attack on allied forces before the Jan. 15 deadline to withdraw from Kuwait accelerated the early morning rise.
Lt. Gen. Sir Peter de la Billiere, commander of British forces in the Middle East, said Iraqi President Saddam Hussein could be expected to take the initiative ahead of the United Nations deadline for him to withdraw his forces.
His comments “gave the market a little pop,” said Peter Beutel, energy director at Pegasus Econometric Inc.
Traders also turned to domestic news, as freezing temperatures hit much of the nation.
Private forecaster Accu-Weather Inc. said temperatures are expected to remain below normal for the rest of the week in New York and New England.
January heating oil gained 2.32 cents to 81.26 cents a gallon, and January unleaded gasoline futures rose 1.90 cents to 68.14 cents a gallon.
“Crude oil prices were a little bit led by the product complex” of heating oil and gasoline, which in turn responded to the cold weather sweeping across the country, said Albert Helmig of Energex, a floor brokerage. Rodeny Dow of Dow International Energy said: “This cold weather coming in has everyone excited. The initial reaction (to cold weather) is always for prices to go up.”