Oil prices climbed by almost $2 a barrel Monday after OPEC agreed to keep its production level steady and after cold weather raised concern about rising demand for home-heating fuels.
Explosions at an oil terminal north of London on Sunday added to the supply jitters, but authorities said the blasts would not lead to a shortage.
Light sweet crude for January delivery on the New York Mercantile Exchange rose $1.91 to settle at $61.30 a barrel.
Nymex heating oil futures gained more than 4 cents to close at $1.7725 a gallon, while natural gas rose 52.9 cents to settle at $14.841 per 1,000 cubic feet, about 15 cents below the record close set last week.
Gasoline futures gained 4.19 cents to settle at $1.6468 a gallon.
Rising oil is likely to lead to higher pump prices as refiners pass along the increased costs. The average U.S. pump price for regular-grade gasoline rose 3.8 cents to $2.185 a gallon, up from a six-month low a week ago, the Energy Department said in a report Monday.
Oil ministers from the Organization of Petroleum Exporting Countries agreed Monday to keep oil spigots open and maintain production at the group's highest-ever levels -- at least for now.
The widely expected decision was reached at Monday's OPEC ministerial policy and production meeting and made public by Fathi Hamed Ben Shatwan, Libya's oil minister. But the group reserved the right to consider cuts in early 2006, if robust demand flags and high prices fall.
"They're comfortable with $60-a-barrel oil as long as they don't see the U.S. or other economies going into any kind of tailspin," said Michael Gross, director of research at Tampa-based Liberty Trading Group.
But while OPEC's output plans were digested by the market, the real catalyst for Monday's rally was the cold weather blanketing the U.S. Northeast, Gross said. "A lot of traders trade on emotion," he said.
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