Oil Positive as OPEC Secretary General Calls Bottom to the Market

Reuters

Oil prices were up for a second straight day on Monday ahead of the first major snowstorm expected this year in the U.S. Northeast.

Gains were limited, however, by the absence of any market disruption in top oil exporter Saudi Arabia after King Abdullah's death.

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An 11-year high in the U.S. dollar <=USD> against other major currencies, and fears of fresh instability in the euro zone after a decisive Greek election victory by the left-wing Syriza party also capped oil's potential for rebound, traders said.

Light snow began falling on the U.S. East Coast on Monday morning, the first signs of a potentially historic blizzard that officials predicted could dump up to 3 feet of snow in the coming day, snarling transportation for millions of people.

The National Weather Service (NWS) issued a blizzard warning for New York City and surrounding areas between coastal New Jersey and Connecticut, beginning 1:00 p.m. EST (1800 GMT) on Monday and worsening overnight into Tuesday morning. It warned of two days of winter storms across the East Coast, from Pennsylvania to Maine.

"Crude is getting some help from supportive heating oil ahead of the blizzard, although with all the flight cancellations, it might end up being a bearish event on oil demand," said Phil Flynn, analyst at Chicago's Price Futures Group.

U.S. crude was up 70 cents at $46.29 a barrel by 12:30 p.m. ET (1730 GMT), having falling to $44.35 earlier.

Brent crude rose 40 cents to $49.19 after a session low at $47.57.

U.S. heating oil rose nearly 2 percent to $1.6749 per gallon.

Gasoline prices came off their lows following news that BP Plc's 413,500-barrel-per-day (bpd) Whiting, Indiana, refinery had completed the restart of a 90,000-bpd crude distillation unit and was working to boost its production to planned output levels. U.S. gasoline was down 0.5 percent at around $1.34 a gallon after dipping to an earlier low of about $1.32

Saudi Arabia's new King Salman pledged continuity in energy and foreign policies on Friday and was quick to retain veteran oil minister Ali al-Naimi, in a message aimed at calming a jittery oil market.

The Saudis were pivotal to OPEC's decision in November not to cut oil exports in order to preserve their market share amid a global supply glut that has more than halved prices since June.

Oil prices may have hit a floor and could move higher very soon, OPEC's secretary-general said Monday in his first comments on the subject after a seven-month-long rout.

(By Barani Krishnan and Samantha Sunne; Additional reporting by Himanshu Ojha in London and Florence Tan in Singapore; Editing by John Stonestreet, David Clarke and Bernadette Baum)