Prices and production
The rally in oil prices which started in mid-December continued this week with oil settling on Wednesday at $83.13, a jump of $1.47 for the day. Prices now have risen by over $11 a barrel over the last three weeks. The increase came despite a jump in US crude inventories due to lower refinery utilization and increased imports. Unusually cold weather across the northern hemisphere from the US to Europe to China and Korea is supporting the price rise as is a weaker dollar. The EIA also reported that the US demand for oil over the last four weeks was up by a fraction of a percent as compared to December 2008. MasterCard, however, reports that US gasoline consumption between Christmas and New Year’s Day fell to the lowest level in more than 13 months.

For now the cold weather, which is forecast to continue for the rest of January, is the main factor maintaining prices. In the US natural gas climbed to a 1-year high of $6 per million BTUs as the very cold weather increased demand.

Heavy snows in northern China are slowing industrial activity as some power plants are running out of coal. Beijing is reporting that 40,000 gallons of diesel oil spilled into a tributary of the Yellow River and at last word 700 workers are attempting to contain the spill.

Heavy snow across southern England has the demand for natural gas at near-record levels and is raising the possibility that the country could start running short as early as next week.

The Iraqi cabinet has approved the deals reached at the oil field auction last year and could pave the way for $100 billion worth of foreign investment in Iraq.

Iran
The Guardian reported that the US now believes that Iran is working on designing a nuclear weapon and is preparing sanctions to be imposed soon. Tehran has rejected the year-end deadline to accept a deal to swap its partially-enriched uranium for fully-enriched reactor fuel outside of the country. In the meantime, Beijing, which does not want to lose Iran as a source of energy, has renewed calls for diplomacy rather than sanctions to resolve the dispute.