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Oil Closes Above $99 on Cold Snap, OPEC Meeting

U.S. crude oil futures ended higher on Monday as traders weighed geopolitical turmoil and OPEC's upcoming policy meeting against rising inventories and the risk of economic slowdown.

On the New York Mercantile Exchange, U.S. light, sweet crude settled up 42 cents or 0.43 percent at $99.23 a barrel, trading from $97.75 to $99.70. Prices are up for the seventh time in the last eight sessions and hit a record $101.32 on Feb. 20.

Heating Oil Delivery Truck
Heating Oil Delivery Truck

"While respecting the market's resilience, given the fundamentals, a measure of skepticism must be expected as well," Mike Fitzpatrick, vice president at MF Global, wrote in a note.

"With oil stocks rebuilding and the risk of a U.S. recession high, justifying oil prices up near $100, unless a more direct threat to supplies is seen, is difficult."

In London, April Brent crude ended 68 cents or 0.7 percent higher at $97.69 a barrel, moving from $96.34 to $97.92.

Ahead of the Organization of the Petroleum Exporting Countries' March 5 policy meeting, analysts pointed to Turkey's incursion into northern Iraq, Iran's nuclear program dispute with the West and Venezuela's battle with Exxon Mobil as supportive factors.

NYMEX March heating oil settled at a new high of $2.7853 a gallon, gaining 2.23 cents or 0.81 percent, trading from $2.7434 to $2.8005, an intraday record eclipsing Friday's $2.7860 peak.

In London, ICE benchmark gas oil futures hit a record high of $901.25 a tonne on Monday on low stocks and cold weather, helping heating oil futures in New York.

U.S. heating demand will be near normal this week, the National Weather Service said. Heating oil demand is expected to average about 5.4 percent above normal this week, the NWS report said.

March RBOB ended up 0.82 cent or 0.32 percent at $2.5419 a gallon, trading from $2.5185 to $2.56.

A Reuters poll of analysts Monday forecast crude supplies to have risen a seventh straight week, by 2.5 million barrels last week. Gasoline supply was seen unchanged, with distillate supplies expected to have dropped 2.4 million barrels.

U.S. crude futures hit an early low below $98 after data showed that the sales rate for U.S. existing homes fell in January.

Ships began moving outbound on Monday along the Houston Ship Channel after a 12-hour traffic shutdown due to dense sea fog, the U.S. Coast Guard said.

A Turkish military incursion into northern Iraq aimed at Kurdish guerrillas was not having a major effect on oil prices, International Energy Agency Chief Economist Fatih Birol told Reuters on Monday.

OPEC output is expected to be down 200,000 barrels per day in February due to lower output from Saudi Arabia and Iran, industry consultant Petrologistics said.

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