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Oil prices rise above US$96 a barrel on possible OPEC output cut, US refinery explosion

Oil prices rise above US$96 a barrel on possible OPEC output cut, US refinery explosion

Oil prices rose Tuesday in Asia as investors eyed the possibility that OPEC may cut production just ahead of the second quarter, when gasoline demand in the Northern Hemisphere usually becomes the central focus of the market.
An explosion at a 70,000-barrel-a-day refinery in Texas may have also boosted prices, but the primary worry is that the Organization of Petroleum Exporting Countries may cut supplies next month to support prices in a US$85-US$100 a barrel range, said Tetsu Emori, commodity markets fund manager at ASTMAX Futures Co. in Tokyo.
OPEC may do so just ahead of the second quarter when oil prices have started an annual run-up the past five years as people looked ahead to "gasoline demand coming in the spring," Emori said.
The explosion Monday at the Alon USA refinery at Big Spring, Texas, injured four workers, with one employee hospitalized for burns. All workers were accounted for about an hour after the explosion, according to Blake Lewis, a spokesman for Alon.
Fires caused by the blast were under control but still burning in the afternoon there (early morning in Asia), Lewis said, and the Dallas-based company was waiting for access to the site to investigate the cause of the explosion.
Light, sweet crude for March delivery rose 75 cents from Friday's floor close to US$96.25 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore.
The price is now about US$9 a barrel more than the closing price in the U.S. on Feb. 6.
Trading volumes have been thin so far this week due to the President's Day holiday in the United States _ where the floor session was closed Monday _ and the start in London of International Petroleum Week, a reputed oil industry conference.
The U.S. Energy Department, the International Energy Agency and now OPEC have all cut demand forecasts for this year.
Also, a seasonal slump occurs in the first quarter of every year, and "people are worrying about a U.S. recession ... giving some effect to oil demand in the U.S.," said Emori.
OPEC wants "take it as a more supportive factor to make further production cuts, even though the price is going higher," he said. "They don't care about the supply-demand balance, what they want to do is hold the price level."
Several reports in recent days have suggested that global economic conditions may not be deteriorating as quickly as feared. The U.S. Federal Reserve said Friday that industrial production in the world's largest economy rose last month in line with expectations.
Traders also were keeping an eye on developments in Nigeria, where militants responsible for attacks on the country's oil infrastructure asked U.S. President George W. Bush to mediate in the long-lasting crisis.
The Movement for the Emancipation of the Niger Delta, or MEND, began intensifying its attacks two years ago, kidnapping foreign workers and sabotaging oil infrastructure.
As a result of the conflict, Nigeria, Africa's biggest producer and a major supplier of crude to America, has seen its output fall by about 20 percent, helping send oil prices higher.
OPEC is scheduled to meet March 5 in Vienna to review its production policy.
The Nymex crude contract for March rose 4 cents Friday to settle at US$95.50 a barrel.
In London on Tuesday, Brent crude for April delivery rose 8 cents to US$94.99 a barrel on the ICE Futures exchange.
Heating oil futures rose 1.93 cent to US$2.6662 a gallon (3.8 liters) while gasoline prices gained 3.4 cents to US$2.5278 a gallon. Natural gas futures rose 17.9 cents to US$8.839 per 1,000 cubic feet.