Saturday, December 3 2005 15:50 Hrs (IST) - World Time -

New York: Oil prices have extended their gains as traders feared supplies may be squeezed in the wake of forecasts calling for a prolonged cold snap in key areas of the United States.

New York's main contract, light sweet crude for delivery in January, climbed 85 cents yesterday to close at 59.32 dollars per barrel.

In London, the price of Brent North Sea crude for January delivery added 90 cents to 57.05 dollars in closing trade.

Bill O'Grady at AG Edwards said crude oil following natural gas prices higher amid predictions of increased heating demands in many US regions.

"It's fears the cold weather will lead a supply problem," he said.

"We've seen the recovery from the hurricanes virtually ceased at this point .Now the concern is as the weather turns colder that they will be supply constraints and that's driving prices significantly higher, " he said.

Mike Fitzpatrick at Fimat USA said a number of factors are pushing up prices, and that is bringing speculators back into the market that drives the market even higher.

"Bullish comments from OPEC and predictions of colder weather this weekend, seemed to reignite the speculative winter buying interest," he said.

"Venezuela and Nigeria are both suggesting that OPEC should be prepared to defend against lower prices. Nigeria, more or less suggested that OPEC should not tolerate prices below 50 dollars, while Venezuela suggested that OPEC needed to be on guard against rising US production. The easy conclusion then, is that the push is on to tighten up supply and that push is coming right into a period in which oil demand is naturally rising," he said.