Oil prices climb back above $59 a barrel
The meeting of OPEC set for Thursday appeared to be doing little to affect prices because of expectations that oil ministers would opt to keep output steady.
OPEC President Mohammed al-Hamli said global oil demand this year appears robust and expressed satisfaction with member compliance to previously decided production cuts, although he said OPEC was closely watching inventories that remained higher than average.
Still, the International Atomic Energy Agency (IAEA), the energy watchdog for the world's major industrialized countries, suggested that OPEC would have to boost production over the longer term.
In its monthly report, the IAEA said global oil and fuel inventories were being depleted faster than usual, a trend that could lead to increased demand for OPEC crude.
Light, sweet crude for April delivery on the New York Mercantile Exchange (Nymex) gained 53 cents to $59.44 a barrel by noon in Europe. The contract dropped $1.14 a barrel on Monday.
Heating oil futures added 2.27 cents to $1.7050 a gallon while natural gas prices were essentially steady at $6.918 per 1,000 cubic feet.
Brent crude rose 60 cents to $61.34 a barrel Tuesday on London's ICE futures exchange. "The last couple of days have been feeling a bit like a recoil as the weather's got warmer in the U.S." said Tobin Gorey, commodity strategist at Commonwealth Bank of Australia in Sydney. "Today it looks like the market is recovering some lost ground."
National Weather Service is predicting above-normal temperatures in most parts of the U.S. Northeast and Midwest for the next two weeks, leading traders to bet that the heating oil season is ending. On Monday, temperatures hit about 60 degrees in New York, Chicago, and Washington, according to AccuWeather.com.
Also, U.S. gasoline inventories are declining just a few months ahead of the summer driving season when demand peaks. PVM Oil Associates in Vienna said that "gasoline ... levels are predicted to drop by 2.2 million barrels" in the next set of U.S. inventory figures expected today. Mike Fitzpatrick at Fimat U.S.A said Fimat saw the recent "breakdown in crude prices as a temporary and mostly technically based situation, because the market had become a bit overextended."