Oil prices rose above $79 barrel Monday for the first time in seven weeks as an extended cold snap triggered an end-of-year rally in energy futures.
Benchmark crude for February delivery added 63 cents to $78.68 a barrel in light, holiday trading on the New York Mercantile Exchange. Prices rose as high as $79.12 earlier in the day, the highest since Nov. 5.
Futures contracts for oil, natural gas and heating oil have all become more expensive this month as snow storms blanketed parts of the country and a sharp drop in supplies of crude and other fuels surprised traders.
More frigid temperatures are expected, with up to four inches of snow forecast for New England, and up to seven inches of snow along the eastern shores of the Lower Great Lakes.
Spot prices are starting to perk up as a result.
According to the latest data from the Energy Information Administration, natural gas prices jumped earlier in December to the highest levels since January, and heating oil prices climbed during the middle of this month.
The EIA is expected to release its weekly survey on retail gas prices later Monday.
Still, the winter chill hasn't boosted energy demand above last year's levels. The U.S. is consuming less petroleum than it did at the same time last year, when oil and gas prices were cheaper and the economy was in recession.
American refiners have cut back on oil imports, which has helped reduce supplies and increase prices. But analyst Andrew Lipow said that oil prices also are rising as China and India expand their petroleum imports.
"That oil is finding a buyer somewhere," Lipow said.
At the pump, retail gas prices rose by less then a penny overnight to a new national average of $2.603 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.
Gas prices have edged up for three consecutive days, albeit slowly, for the first time since the beginning of the month. A gallon of regular unleaded is 2.4 cents cheaper than last month.
In other Nymex trading in January contracts, heating oil climbed 3.4 cents to $2.0696 a gallon while gasoline added 2.97 cents to $2.0193 a gallon. Natural gas increased by 29.8 cents to $5.941 per 1,000 cubic feet.
In London, Brent crude for February delivery rose 69 cents to $77.00 a barrel on the ICE Futures exchange.
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