Oil rises as U.S. faces winter without OPEC boost

Oil rises as U.S. faces winter without OPEC boost

SINGAPORE (Reuters): Oil prices climbed in Asia on Tuesday as OPEC held production steady and the world's top consumer, the United States, faced the prospect of colder weather with thin stocks.

New York Mercantile Exchange crude futures last traded at $34.65 per barrel at 0400 GMT, gaining another 18 cents after ending 45 cents up in New York trading.

OPEC ministers meeting in Vienna on Monday ratified a widely expected agreement to keep output quotas unchanged rather than increase them for the fifth time this year.

Ministers expect oil prices will soon fall within their $22- $28 target range for OPEC's basket of crudes as the full impact of the group's output rise this year of 3.7 million barrels per day hits the market.

"We can only conclude that OPEC has more than fulfilled its role as a reliable oil supplier and that the true reasons for the currently high prices lie behind a series of other factors," said OPEC President Ali Rodriguez of Venezuela.

Rodriguez told reporters that no more crude would come from the group this year.

OPEC meets again on January 17, by which time, oil market analysts expect a year-on-year deficit in inventories to have turned into a surplus.

"In this fourth and also the first quarter, the level of crude oil supplies will exceed the level of demand, leading directionally to a stockbuild, in contrast to what would normally be a stockdraw this time of the year," said John Russel, managing director of Bangkok-based Petroleum Economics Limited (PEL) Pacific.

"The year-on-year stock deficit is expected to disappear as we move through the mid-winter period." he said.

But the immediate focus will be on low U.S. heating oil stocks which will provide a thin buffer for the country in the event of a sharp cold snap.

"While stocks remain tight, it would be very difficult for prices to move significantly lower," Russel said.

Temperatures in the U.S. Northeast are expected to drop below normal this week and in the run-up to the Thanksgiving holiday on November 23, according to Weather Services Corp.

The North American region, where heating oil stocks are more than 40 percent below last year's levels, has so far this year experienced mainly above normal temperatures.