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NEW YORK - Oil prices rose on Monday after Saudi Arabia's oil minister said Opec may need to cut output further, and as dealers anticipated rising demand for heating fuels in the United States.
The dollar's slide to a 20-month low against the euro and mortar attacks in Iraq that set storage tanks ablaze provided additional support, dealers said.
"You had Opec talking about another production cut and forecasts for cooler weather late this week helped heating oil," said Phil Flynn, analyst at Alaron Trading. "And you had the mortar attacks in Iraq."
US crude rose 49 cents to US$59.73 a barrel by 1.35 pm (7.35am NZT) after rising briefly over US$60. London Brent crude slipped 7 cents to US$59.96.
Opec heavyweight Saudi Arabia said over the weekend that if recent supply curbs fail to balance the world energy market, the producer group would cut crude oil output further when it meets December 14.
"We must look at the impact of the measures decided in Doha. If they are adequate, we will be satisfied, if they are not we will act again and the aim is to bring stability back to the market," Saudi Oil Minister Ali al-Naimi said.
Opec decided at an emergency meeting in Doha in mid October to cut output by 1.2 million barrels per day to buoy the market, but energy analysts have doubted Opec's ability to fully deliver on the agreement.
Oil prices are nearly 25 per cent below their peak hit in July as rising US energy stockpiles and concerns over a possible economic slowdown weighed on the market.
Further bolstering prices Monday, private forecaster AccuWeather predicted that a recent warm spell in the US Northeast, the world's biggest heating oil market, would end abruptly by the weekend.
"A potent storm system moving out of the West will unleash a bitter blast of a cold air across much of the country, reaching the East Coast by the weekend," AccuWeather said.
"There are probably more reasons to be bullish than bearish," said Angus McPhail of investment company Alliance Trust, noting the expected increase in heating demand.
Adding support to commodities markets, the dollar dipped to a 20-month low against the euro and a three-month low against the yen on Monday on economic worries. The softness in the dollar helped boost gold XAU to its highest level in more than three months as funds shifted their assets.
"The oil markets are also being supported by a sharply weaker dollar, which makes dollar-denominated oil cheaper in euros and yen," said Addison Armstrong, analyst at TFS Energy, in a research note.
In Iraq, mortar attacks set ablaze oil storage tanks in the northern part of the country. A source at the state North Oil Company said output from the region could be reduced for some time.
The blast is another blow to Iraq's oil industry, crushed by decades of sanctions and war. The northern oilfields, clustered around Kirkuk, used to pump a third of Iraq's three million barrels per day oil output before the 2003 US led invasion.
Since 2003, output has sagged to around two million bpd.
- REUTERS
