NEW YORK - Oil prices rallied Monday on expectations that OPEC will reduce output later this month. Prices also climbed as a massive winter storm pounded the Northeast, the nation's biggest heating-oil market.
The storm forced the New York Mercantile Exchange to close early at 1 p.m. EST Monday. The exchange also decided to begin energy-futures trading one hour later, at 10:45 a.m., on Tuesday.
Crude oil for April delivery rose 76 cents, or 2.7%, to settle at $28.60 a barrel. May crude gained 68 cents, or 2.4%, to finish at $28.59 a barrel.
April heating oil surged 1.56 cents, or 2.2%, to end at 74.08 cents a gallon. April gasoline closed up 0.78 cent at 88.17 cents a gallon.
The Middle East Economic Survey, a highly respected and influential publication, reported that OPEC is 'virtually certain' to cut oil production at its ministerial meeting in Vienna March 16. All OPEC members support the idea of a production cut and are debating how deep the reduction should be, the survey said.
Analysts believe that OPEC members such as Saudi Arabia would back a cut of 500,000 barrels a day, while other members, especially Iran, Algeria, Libya, Nigeria and Indonesia, would push for a cut of 1.5 million barrels a day.
At its last meeting in January, OPEC, which is responsible for 40% of global oil output, reduced production quotas by 1.5 million barrels a day in anticipation that oil demand would drop in the second quarter, when winter heating needs end.
Meanwhile, the huge storm blanketing the Northeast brought rain, sleet and snow to the northern mid-Atlantic coastline and New England. Further inland, the rest of New England, the southern Great Lakes and far eastern Ohio were expected to be socked. A foot of snow fell across a wide swath of upstate New York. The storm was expected to last through Tuesday and dump up to two feet of snow in parts of upstate New York and New England.
'Weather is increasing demand and helping to push the prices up. This kind of storm ... makes folks nervous,' said John Kilduff, senior vice president at Fimat USA, Inc. in New York.
Also at the Nymex, April natural gas rose 6.6 cents, or 1.3%, to settle at $ 5.336 per million British thermal units.
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