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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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