VIENNA -- Oil prices briefly raced above $47 a barrel yesterday, then backed off after worries faded about colder weather in the United States and about rough weather that slowed efforts to restore crude production in the North Sea.
Markets were also concerned that OPEC producers may cut output again this month.
While oil prices are well below the late October high of more than $55 a barrel, traders remain wary about heating oil supplies in the United States, as well as possible supply disruptions in Iraq and terrorist activity in Saudi Arabia, the world's top supplier of crude oil.
February crude oil futures rose as high as $47.30 per barrel before settling 18 cents lower at $45.25 a barrel on the New York Mercantile Exchange. Heating oil futures were up less than a penny at $1.2763 per gallon, retreating from intraday highs of $1.35 per gallon.
Aaron Kildow, an analyst with Prudential Securities in New York, said the initial spark that got buyers going was a colder-than-expected 8-14 day forecast made by the National Weather Service. As that rally lost steam, traders began backing out and looking toward the next US government petroleum supply report, expected to show rising inventories of distillate fuel, including heating oil.
''From a fundamental standpoint, $45 a barrel, is more appropriate than $47," Kildow said.
Brent crude for February delivery ended 26 cents lower at $42.92 per barrel on the International Petroleum Exchange.
''Investors are getting skittish," said Esa Ramasamy, oil editorial manager of energy reporting agency Platts.
OPEC members reduced production by 1 million barrels a day from the start of 2005 to bring the cartel closer to its official output ceiling of 27 million barrels. Oil ministers said then that they were ready to reduce output again if needed when they meet at their Vienna headquarters on January 30.
''The Saudis have already said they'd like to keep prices for their own crude above $35," said Deutsche Bank oil price strategist Adam Sieminski in London. ''It's now about $38."