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Oil prices briefly shot above $63 a barrel Thursday in a rally that brokers attributed to technical trading, coupled with buying prompted by the approach of the Northern Hemisphere winter.
Natural gas futures also climbed following the release of government data that showed a net withdrawal of natural gas from domestic underground storage facilities.

Analysts are split over whether the recent surge in energy futures represents a correction for a market that had been trending lower since late summer, or if it is the beginning of a new upswing.

Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, argued prices are headed higher.

“There are bullish factors in the market finally. I expect prices will rise to $64-65 in December,” Emori said.

But Mike Guido, commodities strategist for Societe General in New York, said the picture is less clear. For the time being, Guido believes the $7 jump in front-month crude-oil futures is a reflection of short-covering, in which traders who had expected an even steeper decline in prices this fall have been forced to cover their bets.

However, if prices settle above $63.50, Guido said that might signal a “breakout” to the upside.

Light sweet crude for January delivery rose 62 cents to $63.08 a barrel on the New York Mercantile Exchange. Brent futures rose 42 cents to $63.49 on London’s ICE exchange.

The possibility of further production cuts by the Organization of Petroleum Exporting Countries when it meets next month in Nigeria has also weighed on traders’ minds in recent days.

But “as long as prices sustain over $60, I think they don’t need to discuss cuts,” Emori said.

In other Nymex trading, natural gas futures rose 6 cents to $8.93 per 1,000 cubic feet. In its latest weekly report, the Energy Department said underground storage of natural gas declined by 32 billion cubic feet last week to 3.23 trillion cubic feet. That is still more than 7 percent above the five-year average for this time of year.

Heating oil futures rose by more than half a penny to $1.8010 per gallon, while unleaded gas futures were steady at $1.6706 a gallon.

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Winter’s deep freeze is going to force Albertans trying to keep their homes warm to dig deeper into their pockets, after new rates were proposed by natural gas providers yesterday.

Direct Energy announced that due to expected higher natural gas prices and because consumers were undercharged in their bills in November, customers will be forced to pay more to stay warm in December.

The only thing taking away some of the nip from the cold, hard truth is the government’s rebate program, which is triggered during the months of October through March and that will see some of the cost scaled back.

Before the government’s rebate is calculated, Calgary and area residents will pay an average of $270 for heating energy in December.

But after the rebate is applied, the average amount southern Alberta consumers will pay for natural gas next month will be $215.

The proposed natural gas rate is about $8.23 per gigajoule.

Gas bills will also be affected by the cold snap, said Direct Energy spokeswoman Lisa Frizzell.

“In terms of market prices, we’re seeing them trending upwards … partly in anticipation of cold winter weather across the continent,” said Frizzell.

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Democrats say neither tax benefit should be needed for an industry reaping large profits at today’s high crude oil prices.

Over 10 years, the production tax credit saves oil companies $5 billion and the refinery measure and exploration credit a total of about $1.4 billion, according to Congressional Budget Office estimates.

Other oil tax breaks probably will go unchallenged. That includes some passed by Congress only a year ago and others already targeted for repeal this year.

For example, House Democrats have no plans to change a provision that allows oil companies to avoid billions of dollars in taxes by the way they calculate inventories. The Senate this year agreed to a repeal; the effort was abandoned amid House GOP opposition and an uproar from other industries that also benefit from the tax language.

House Democrats also are shying away from tampering with more than $1 billion worth of oil- and gas-related tax breaks, enacted last year. These breaks largely benefit small companies or gas utilities rather than the major oil companies now awash in cash.

Nevertheless, the House and Senate are expected to push legislation early to force oil companies to renegotiate flawed offshore drilling leases that have allowed the companies to avoid paying federal royalties. The loss eventually could cost the government $10 billion, according to some congressional estimates.

Other prime targets of House and Senate Democrats include:

-Alleged price gouging. Proposals to create a federal price gouging law for gasoline and other fuels probably will move quickly.

-More incentives and mandates to expand the use of ethanol and biodiesel as a substitute for gasoline. Requiring oil companies to phase in retail pumps that deliver fuel that is 85 percent ethanol.

-Requiring power companies to produce a percentage of their electricity from renewable energy sources such as wind and solar power. Such a measure is a priority of Sen. Jeff Bingaman, D-N.M., incoming chairman of the Senate Energy and Natural Resources Committee.

-Extending energy efficiency tax credits approved by Congress last year. Most are scheduled to expire at the end of next year.

-Expanding a tax break for buyers of gas-electric hybrid cars and offering more incentives for automakers to build greater numbers of the vehicles.

Rep. John Dingell, D-Mich., who will take over as chairman of the House Energy and Commerce Committee, said he plans hearings on legislation to spur further production and distribution of ethanol and biodiesel, and promote conservation.

But he suggested it will take time to produce legislation. “The process is a long one. It takes hearings, it takes fact finding,” said Dingell in a telephone interview.

On the Senate side, Bingaman probably will avoid writing a single broad energy bill, preferring to push through specific legislation. Among Bingaman’s other goals are new incentives to spur renewable energy development and more tax breaks for conservation.

Last spring, Sen. Charles Schumer, D-N.Y., said if the country is to reduce its addiction to oil and high energy prices it needs a “crash program” to develop more alternative energy sources, dramatically increase conservation and examine “whether or not we should break up the big oil companies.”

Next year, Schumer assumes the No. 3 leadership position among Senate Democrats and will be one of the party’s top strategists.

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Oil briefly dropped below $55 Friday to its lowest level since mid-2005 amid fund selling across commodity markets on worries of an economic slowdown in the world’s largest energy consumer, the United States.

High U.S. oil inventories heading into winter, and selling pressure ahead of the expiry of the front-month U.S. crude contract at the close of trading Friday, fueled the selling.

U.S. crude was down 61 cents at $55.65 a barrel at 1600 GMT after hitting its lowest level since June 14 last year at $54.86. The price has fallen nearly 30 percent from the record of $78.40 in July. London Brent crude rose 11 cents at $58.65.

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“There is rising concern that we could be going into a U.S. economic slowdown,” said Rick Mueller, senior oil analyst at consultancy ESAI. “This fall also speaks of a well supplied crude market and a warmer outlook in the U.S., and with those conditions maybe the market is starting to wake up to the fact that prices shouldn’t be near $60.”

There was also widespread talk in the market that a fund was in trouble and unwinding its positions.

Base metals also slid on concern that if the world’s largest economy slows, global demand for raw materials would also suffer. London copper prices slid to their lowest levels since June on Friday.

U.S. industrial output data for October on Thursday was weak, showing signs of a cooling economy.

Oil markets had traded in a roughly $58-$62 barrel range for around six weeks, the longest period of range-bound trading since the same time a year ago

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Hundreds of thousands of people on Saturday marched in Caracas to support opposition presidential candidate Manuel Rosales, whose populist campaign has focused on reducing crime and redistributing oil wealth.

Rosales, governor of the oil-rich Zulia state, trails leftist President Hugo Chavez by around 20 percentage points in most private polls ahead of the December 3 election.

Chavez is a close ally of Cuba and fiercely opposes the Bush administration even though Venezuela provides around 12 percent of U.S. oil imports.

Opposition sympathizers donning Venezuela’s signature red, yellow and blue patriotic colors joined the march, which spanned some 12 miles across most of the capital city.

“Rosales is our last hope to prevent this country from becoming another Cuba,” said 53-year-old engineer Antonio Romero, who marched with his family carrying Venezuelan flags.

Rosales promises to end Chavez’s confrontation with the Bush administration, redistribute bountiful oil revenues and reduce soaring crime rates throughout Venezuela.

Opposition leaders also accuse the Chavez government of drawing up blacklists to intimidate voters and requiring public employees to join pro-Chavez campaign activities.

“Enough of being afraid in this country,” said Angela Barrera, 28, a graphic designer whose face was painted with the colors of the Venezuelan flag. “On December 3, what will be heard is the voice of the people who want a future.”

A video released this week showed the nation’s top energy official saying the government should not employ oil workers opposed to Chavez — statements Chavez himself later backed despite intense criticism

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