Crude futures close at a two-week high above $55 (up $2.47/bbl today)

[jpak]

http://www.marketwatch.com/news/story/cold-weather-helps-boost-crude-oil/story.aspx?guid=%7BF10EF15E-6A81-42CC-A5E0-19BDD6E9C262%7D

Continued cold weather across much of the nation and forecasts that it will persist for at least another week also helped lift natural-gas futures to their highest level in almost six weeks.

And escalating tensions over Iran's continued nuclear activities, ongoing violence in Nigeria and predictions for the first decline in distillate supplies in six weeks added to oil's strength.

"The most impressive part of the day was that the market finally finished off a rally," said Phil Flynn, a senior analyst at Alaron Trading. "The majority of rallies have retreated.

<snip>

Crude for March delivery closed up $2.46, or 4.7%, at $55.04 a barrel on the New York Mercantile Exchange in its first full day as the front-month contract. That was its strongest closing level since Jan. 9. It touched a high of $55.15, the contract's highest intraday level since Jan. 11.

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[Dogmudgeon]

1. The volatility of the market amazes me

Oil prices are down almost 30% from their recent high points. I know I thought that "Plateau Oil" prices would be subject to wild swings, but it's still surprising to see it in action.

The last time I checked, we're still oscillating around 84.5 Mbbl/day consumption, where we've been for about the past two years. Production is tougher to gage, but I believe it's been essentially flat, too.

The feces will hit the fan when one of the Big Five oil fields declares that production has collapsed. The odds right now are on that announcement coming from Pemex about the Cantarell field later this year or early in '08.

--p!

[Strelnikov_]

2. SPR To Increase From 700 M bbl To 1500 M bbl

Seems someone sees a rainy day over the edge of the plauteau.

Oil prices had spent Tuesday's session on the rise, but Flynn attributed the last minute, late-session rally to U.S. Energy Secretary Samuel Bodman's announcement that the government will boost the size of the nation's emergency oil reserve.

It'll begin buying crude this spring at a rate of about 100,000 barrels per day, according to Dow Jones Newswires. The acquisition is part of a new plan to double the capacity of the Strategic Petroleum Reserve to 1.5 billion by 2027, it said. Read more.