NEW YORK (Reuters) - Oil prices jumped on Wednesday as analysts forecast U.S. crude and distillates supplies would slip and on expectations that the Organization of Petroleum Exporting Countries will cut output when it meets in January.
The U.S. Energy Information Administration will release weekly petroleum supply data on Thursday, a day later than normal, after Monday's Christmas holiday.
Analysts forecast that U.S. crude supplies last week slipped 700,000 barrels, distillates supplies fell 800,000 barrels and gasoline supplies were steady.
``It's strong across the board on the supply forecasts,'' said a trader on the floor of the New York Mercantile Exchange.
The supply draw forecasts had an amplified upward effect on the market as many players were out in the week between the Christmas and New Year holidays, a trader on the floor said.
Both U.S. crude and distillates supplies are in surplus over last year, but gasoline supplies are in deficit.
Refinery runs have been running below last year's levels following damage from hurricanes in August and September.
February crude futures (CLc1) settled $1.66 higher at 59.82 a barrel on NYMEX. In London, Brent crude (LCOc1) traded $1.35 higher at $57.64 on the International Petroleum Exchange.
Prices are up more than a third since January and have averaged $56.66 a barrel, almost 37 percent more than the 2004 average. Analysts forecast a price of $57.34 for 2006.
Crude supply concerns eased this week after Royal Dutch Shell said it had managed to restore most of its production in Nigeria after pipeline attacks a week ago.
But OPEC was likely to decide to cut production in the second quarter of 2006 when it meets next month as officials say supply exceeds demand.
Cartel heavyweight Iran viewed an OPEC production cut of 1 million barrels per day a ``good figure'' in a newspaper interview on Wednesday. The group meets on January 31 to decide production policy.
Warmer weather in the U.S. Northeast, the world's largest heating oil market, could keep prices volatile.
``At the start of the winter, they talked about a colder than expected winter. Now they're talking about a warmer than expected one,'' said Sam Tilley, head of research at British broker Sucden. ``We're not out of the woods with the weather yet.''
Temperatures across most of the United States have been unseasonably high for the past week and were expected to remain so through the weekend, forecasters say.
The Northeast will be 6 to 10 degrees warmer than usual until Sunday, private forecaster Meteorlogix said Wednesday.
The Midwest, which uses mainly natural gas for heating, will also be warmer than usual for the next week to 10 days, undermining high-flying natural gas prices.
Natural gas futures, which soared to record highs near $16 per million British thermal units in mid-December, have since fallen by about a third as a cold snap passes.
Winter heating fuel stocks in Japan, the world's third-largest consumer, fell again last week as frigid weather enveloped most of the country. Kerosene inventories fell more than 8 percent to about 23.5 million barrels, industry data showed.