A fresh slug of arctic air will keep temperatures in the Midwest and Plains below mid-winter averages tomorrow.

Snow showers and squalls will plague areas from the Great Lakes southward into eastern Kentucky. The heaviest squalls (lake-effect) will target southwest Michigan and northeast Ohio where local totals could reach a foot. Gusty winds will plague most areas.

High temperatures are predicted to range from the single digits in parts of southern Minnesota and northern Iowa to the 30s in portions of the western Dakotas, south-central Kansas and much of Kentucky.

Oil prices fell Monday despite forecasts of continued cold weather across the U.S. East Coast, a major market for heating oil.

An unusually warm winter in the U.S. drove crude oil below $50 a barrel earlier this month, but the price has since risen about 10 percent as cold weather returned. Forecasters predicted below-normal temperatures on the U.S. East Coast region would continue into at least the first week of February.

"The continuation of cold weather in the United States -- after a pretty warm start of the winter -- helps shore up prices because if there was no cold weather at all, there would be huge inventories," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "The market's not worried about that any longer."

Light, sweet crude for March delivery on the New York Mercantile Exchange fell 34 cents to $55.08 a barrel in electronic trading by early afternoon in Europe. The contract had risen $1.19 on Friday.

Oil prices rose above $55 a barrel Friday on concerns that oil producers were complying with OPEC's production cuts and on expectations of continued blustery weather in the northeastern United States.

Light, sweet crude for March delivery on the New York Mercantile Exchange rose $1.02 to $55.25 a barrel in morning trading in New York. Brent crude rose $1.03 to $55.15 a barrel on the ICE Futures exchange in London.

Tank tracker Lloyds Marine Intelligence Unit said Friday that oil exports from the Organization of Petroleum Exporting Countries fell to less than 23 million barrels a day in December from just under 24 million barrels a day in November, according to a Dow Jones newswire report.

Working gas in storage was 2,757 Bcf as of Friday, January 19, 2007, according to EIA estimates. This represents a net decline of 179 Bcf from the previous week. Stocks were 251 Bcf higher than last year at this time and 472 Bcf above the 5-year average of 2,285 Bcf. In the East Region, stocks were 291 Bcf above the 5-year average following net withdrawals of 75 Bcf. Stocks in the Producing Region were 170 Bcf above the 5-year average of 682 Bcf after a net withdrawal of 61 Bcf. Stocks in the West Region were 11 Bcf above the 5-year average after a net drawdown of 43 Bcf. At 2,757 Bcf, total working gas is above the 5-year historical range.

Crude oil fell, paring yesterday's 4.7 percent gain, after an Energy Department report showed that the U.S. has ample fuel inventories.

Crude-oil supplies rose 789,000 barrels to 322.2 million last week, according to the report. Stockpiles of distillate fuel, which include heating oil and diesel, climbed 750,000 barrels to 142.6 million, the report showed. Yesterday, prices jumped the most since September 2005 after the U.S. said it would double the Strategic Petroleum Reserve by 2027.

On the eve of U.S. President George W. Bush's address to Congress which is expected to tout the need for more U.S. energy independence, Saudi Arabia's U.S. ambassador on Monday said that the world's biggest oil user will rely on Middle East crude oil "for many years to come."

Bush's annual State of the Union address on Tuesday is expected to touch on key energy policy points after Bush made the surprise pronouncement during last year's address that the United States is addicted to crude oil, including supplies imported from the Middle East.

However, U.S. policymakers should be talking about interdependence with Middle East suppliers, not independence, said Prince Turki Al-Faisal, the kingdom's U.S. ambassador, speaking at George Washington University.

"I think we should be talking not about being independent of Middle East oil for the United States but rather being interdependent with the Middle East for energy sources," Al-Faisal said.

The United States and other nations "will remain in need of the resources of our part of the world in the energy sector for many years to come and that is something that your people should realize," he said.

Saudi Arabia is the world's biggest crude oil producer and the linchpin of the OPEC producer group, which pumps over a third of global oil supplies.

ConocoPhillips and Marathon Oil Corporation today announced the companies have jointly filed for a 2-year extension of the Kenai Liquefied Natural Gas (LNG) facility's export license with the U.S. Department of Energy. The current license ends March 31, 2009 and this application would extend the export license thru March 31, 2011.

The Kenai LNG facility, located in Nikiski, Alaska, is the only LNG export plant in North America. The facility initiated operations in 1969 and today employs 58 people; the plant also supports another 128 jobs in the Kenai community. In addition, the operations of the plant contribute approximately $50 million in royalties and taxes to the state and local economies.

"This extension will mean continued investments in the development of Cook Inlet gas resources and will maintain high paying jobs in the community," said Darren Jones, ConocoPhillips Vice President of Alaska Commercial Assets. "ConocoPhillips believes that Cook Inlet has sufficient gas resources to maintain a strong industrial base on the Kenai Peninsula and this extension will provide an incentive for further gas development."

"The Kenai LNG operation has played a vital role in the economy of Southcentral Alaska for 38 years," said John Barnes, manager of Marathon's Alaska Production Operations. "This operation is not only a key element of our Alaskan operations, it is a strategically important asset for the region and the state, and its continued operation provides options and flexibility in meeting the future energy needs of the region."

In addition to the direct and indirect employment and other economic benefits to the community, there are hundreds of exploration, production and oil field service jobs in the Cook Inlet fields that provide gas to the facility.

The plant, operated by ConocoPhillips, is owned by ConocoPhillips (70 percent) and Marathon Oil Corporation (30 percent).

Working gas in storage was 2,936 Bcf as of Friday, January 12, 2007, according to EIA estimates. This represents a net decline of 89 Bcf from the previous week. Stocks were 354 Bcf higher than last year at this time and 491 Bcf above the 5-year average of 2,445 Bcf. In the East Region, stocks were 262 Bcf above the 5-year average following net withdrawals of 52 Bcf. Stocks in the Producing Region were 193 Bcf above the 5-year average of 720 Bcf after a net withdrawal of 20 Bcf. Stocks in the West Region were 37 Bcf above the 5-year average after a net drawdown of 17 Bcf. At 2,936 Bcf, total working gas is above the 5-year historical range.

Saudi Arabia plans to increase its crude oil production capacity nearly 40 percent by 2009 and double its refining size over the next five years to keep pace with growing global demand, the country's oil minister said Thursday.

The minister, Ali Naimi, said the plans were part of a $80 billion commitment that Saudi Arabia — the world's biggest oil exporter — had made to increase oil supplies in the global market.

"Saudi Arabia is committed to increasing the availability of energy to global markets," he said.

The country's priority is in investments to increase sustainable oil production capacity to 12.5 million barrels daily by 2009, from 9 million barrels now, Naimi said.

"Additional projects have been identified for implementation after 2009, if warranted by market conditions."

Naimi blamed the sharp rise in global crude prices over the past two years mostly on "insufficient investment and rising energy demand," especially from the booming economies of Asia.

"The rise has been a wake-up call for the industry and for producers and consumers alike, who are now beginning to address deliverability problem head on," he told delegates to an international energy conference in New Delhi.

Saudi Arabia, which has a quarter of the world's proven oil reserves, has a significant stake in ensuring stable markets, Naimi said.

Saudi Arabia is also making substantial investments in refineries within and outside the country so to double its refining capacity to 6 million barrels a day over the next five years, he said.

Naimi said an assessment by his government has revealed that "oil will remain the fuel of choice for the transportation sector and as such, will make up a significant portion of new energy demand in the coming decades."

He said he believes there are enough oil resources to meet energy demands for the next 30 years.
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Saudi Arabian Oil Minister Ali al-Naimi has sent crude prices lower with his rejection of calls for further cuts in production.

The minister, who represents the Organisation of Petroleum Exporting Countries' largest producer, said the group must wait to assess the effect of two reductions already agreed — 1.7 million barrels a day, or 2 per cent of world supply.

Crude prices have already plunged 16 per cent this year, leading Venezuela and Algeria to seek a third accord since October to cut supply.

"There is actually no real need now," Mr al-Naimi told reporters as he arrived in New Delhi for an oil conference. "I believe in a very short time it is going to improve."

OPEC agreed on a 1.2 million barrel a day cut, effective from November 1, at an October 20 meeting in Doha, Qatar.

Warmer than usual winter weather has curbed consumption in the northern hemisphere, increasing stockpiles in developed economies.

Oil fell below $US52 a barrel after Mr al-Naimi spoke, extending a four-week slump that prompted the calls for an emergency OPEC gathering before the next regular meeting scheduled for March 15.

Futures for February delivery fell as much as 3.5 per cent to $51.15 a barrel on the New York Mercantile Exchange on Monday.

Oil prices slumped Tuesday after OPEC powerhouse Saudi Arabia reportedly said there was no need for further production cuts to prop up the market.

The comments, by Saudi Oil Minister Ali Naimi, added to growing sentiment that the Organization of Petroleum Exporting Countries would not call a special meeting any time soon to discuss further production cutbacks to stem a more than 13-percent slide in prices this year.

"There is no need now (for further cuts) on the basis of what market conditions are," Dow Jones Newswires quoted Naimi as saying after arriving in New Delhi for an international conference organized by India's Oil Ministry.

Benchmark light sweet crude plummeted $1.43 to $51.56 in morning trading on the New York Mercantile Exchange, after hitting a new 19-month intraday low of $51.25. The price was being compared with Friday's Nymex settlement as the exchange was closed Monday for the Martin Luther King Jr. holiday.

February Brent crude on London's ICE Futures exchange fell 76 cents to $52.36 on Tuesday on London's ICE futures exchange.

Heating oil futures slid nearly 2 cents to trade at $1.4860 per gallon; gasoline futures fell 4.3 cents to $1.3890; and natural gas futures dropped 2.9 cents to $6.572 per 1,000 cubic feet.

Crude oil rose from a 19-month low in New York after some traders said this week's drop in oil prices wasn't justified. Some analysts expect OPEC's members to cut production to stop prices from declining.

Crude oil fell 6.4 percent this week in New York as mild weather in the U.S. Northeast, the region that consumes the most heating oil, cut demand. OPEC President Mohamed al-Hamli said yesterday's drop below $53 a barrel was ``unacceptable'' and urged members to comply with the cuts in output they had promised to make in November and in February.

``The supply sides are going to remain tight,'' said Greg Smith, the U.K. managing director of the investment advisers Fat Prophets U.K. Ltd. ``OPEC can be successful in getting that price up, certainly getting it back towards $60 a barrel.''

Crude oil for February delivery rose as much as $1.06, or 2 percent, to $52.94 a barrel in after-hours electronic trading on the New York Mercantile Exchange, its first gain this week. The contract traded at $52.34 at 12:58 p.m. in London.

Brent crude oil for February settlement climbed as much as $1.24, or 2.4 percent, to $52.94 a barrel in electronic trading on the ICE Futures exchange and traded at $52.36 in London.

Some analysts and brokers expect a forecast for colder weather next week to push prices higher. Colder weather will reach the northeastern U.S. Jan. 17 through Jan. 21, according to the U.S. National Weather Service. Temperatures in the region were milder than normal through the first part of winter. New York had its third-warmest December on record.

``The temperature is expected to drop below normal after'' the next five days, said Michael Davies, an analyst in London with broker Sucden (U.K.) Ltd. ``Many traders are expecting OPEC to take action in order to support prices.''

Working gas in storage was 3,025 Bcf as of Friday, January 5, 2007, according to EIA estimates. This represents a net decline of 49 Bcf from the previous week. Stocks were 401 Bcf higher than last year at this time and 461 Bcf above the 5-year average of 2,564 Bcf. In the East Region, stocks were 241 Bcf above the 5-year average following net withdrawals of 28 Bcf. Stocks in the Producing Region were 182 Bcf above the 5-year average of 751 Bcf after a net withdrawal of 9 Bcf. Stocks in the West Region were 38 Bcf above the 5-year average after a net drawdown of 12 Bcf. At 3,025 Bcf, total working gas is above the 5-year historical range.

Summary of Weekly Petroleum Data for the Week Ending January 5, 2007

U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the
week ending January 5, up 74,000 barrels per day from the previous week's
average.  Refineries operated at 91.5 percent of their operable capacity last
week.  Gasoline production declined last week compared to the previous week,
averaging nearly 9.2 million barrels per day, while distillate fuel production
increased, averaging over 4.4 million barrels per day.

U.S. crude oil imports averaged 9.5 million barrels per day last week, down
621,000 barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged over 9.4 million barrels per day, or 534,000 barrels
less than averaged over the same four-week period last year.  Total motor
gasoline imports (including both finished gasoline and gasoline blending
components) last week averaged over 1.0 million barrels per day. Distillate fuel
imports averaged 475,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) dropped by 5.0 million barrels compared to the previous week.
However, at 314.7 million barrels, U.S. crude oil inventories remain above the
upper end of the average range for this time of year.  Total motor gasoline
inventories rose by 3.8 million barrels last week, and are near the upper end of
the average range.  Distillate fuel inventories rose by 5.4 million barrels, and
are above the upper end of the average range for this time of year.  Increases
were seen in both high-sulfur distillate fuel (heating oil) inventories and
diesel fuel inventories (a combination of ultra-low-sulfur and low-sulfur). 
Total commercial petroleum inventories jumped by 7.4 million barrels last week,
and are above the upper end of the average range for this time of year.

Total products supplied over the last four-week period has averaged 20.4 million
barrels per day, or 4.2 percent less than averaged over the same period last
year.  Over the last four weeks, motor gasoline demand has averaged 9.3 million
barrels per day, or 0.8 percent above the same period last year.  Distillate
fuel demand has averaged 4.2 million barrels per day over the last four weeks,
or 2.6 percent below the same period last year. Jet fuel demand is down 8.8
percent over the last four weeks compared to the same four-week period last
year.

Crude oil fell to the lowest in a year and a half as mild weather in the eastern U.S. curbed heating- fuel consumption, causing stockpiles to increase.

Temperatures in New York will rise to 48 degrees Fahrenheit (9 Celsius) today, 10 degrees above the normal high, the National Weather Service said. The city had its third-warmest December on record. OPEC will speed up a 500,000 barrel-a-day output cut by almost a month to stop the fall in oil prices, Qatar's oil minister said.

``It's hard to be worried about heating-oil supplies when we've seen 60-degree weather this January,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. ``Refiners are shifting to gasoline production, which should leave us with ample supplies when demand picks up. Demand for crude oil should fall as the product stockpiles grow.''

Crude oil for February delivery fell $1.37, or 2.4 percent, to $54.72 a barrel at 10:21 a.m. on the New York Mercantile Exchange. Futures touched $53.88, the lowest since June 13, 2005, prior to Hurricane Katrina, which destroyed oil platforms and refineries along the U.S. Gulf of Mexico coast. Prices are down 10 percent this year and 14 percent from a year ago.

Crude oil rose for a second day on speculation that falling temperatures in the U.S. may boost heating demand in the world's largest energy consumer and as Russian supplies to Poland and Germany were curtailed.

Up to six inches of snow may fall today in parts of the U.S. Northeast, where four-fifths of the country's heating oil is burned, according to forecasting service Accuweather.com. Russian crude oil deliveries to Poland and Germany along a million barrel- a-day pipeline were halted following a dispute between Russia and Belarus, according to the Polish pipeline operator.

``The weather is the main driver of the market now,'' said Gerrit Zambo, an oil trader at BayernLB in Munich. ``Even small signs of cooler temperatures can bring prices back up toward the $60 a barrel region.''

Crude oil for February delivery rose as much as $1.41, or 2.5 percent, to $57.72 a barrel on the New York Mercantile Exchange and traded at $57.46 at 2:41 p.m. London time. Brent crude oil gained $1.35 to $56.99 a barrel on the London-based ICE Futures exchange.

Polish pipeline operator PERN Przyjazn SA and Grupa Lotos SA, Poland's second-largest refiner, said supplies via the Druzhba pipeline that transports Russian crude through Belarus were cut off last night. The Polish segment of the pipeline carries about 50 million tons of oil a year, including 27 million tons to German refiners.

U.S. Weather

Temperatures may drop below normal in the western U.S. this week and cooler weather will spread across most of the country until Jan. 20, according to the National Weather Service.

New York-traded crude rose 72 cents, or 1.3 percent, to $56.31 a barrel on Jan. 5 after dropping almost 9 percent the previous two sessions. Prices fell last week amid mild weather in the U.S. Northeast and after U.S. fuel inventories climbed more than expected.

Last week's price decline was the biggest since April 2005. The price of oil has plunged about 27 percent from the record $78.40 a barrel reached July 14 after Israeli forces invaded Lebanon to fight Hezbollah militants.

``The next move is likely to be back up again,'' said Adam Sieminski, chief energy economist at Deutsche Bank AG in New York. ``There could be rising hysteria in OPEC because a number of the countries like Iran and Venezuela have been spending like oil was going to stay at $70 a barrel.''

The Organization of Petroleum Exporting Countries agreed to cut output by 1.2 million barrels a day in November, citing slower-than-forecast demand growth and rising global stockpiles. Members agreed in December to cut another 500,000 barrels a day starting Feb. 1.

Working gas in storage was 3,074 Bcf as of Friday, December 29, 2006, according to EIA estimates. This represents a net decline of 47 Bcf from the previous week. Stocks were 433 Bcf higher than last year at this time and 408 Bcf above the 5-year average of 2,666 Bcf. In the East Region, stocks were 201 Bcf above the 5-year average following net withdrawals of 33 Bcf. Stocks in the Producing Region were 170 Bcf above the 5-year average of 772 Bcf after a net withdrawal of 5 Bcf. Stocks in the West Region were 37 Bcf above the 5-year average after a net drawdown of 9 Bcf. At 3,074 Bcf, total working gas is above the 5-year historical range.

Summary of Weekly Petroleum Data for the Week Ending December 29, 2006

U.S. crude oil refinery inputs averaged over 15.5 million barrels per day during
the week ending December 29, down 96,000 barrels per day from the previous
week's average.  Refineries operated at 91.0 percent of their operable capacity
last week.  Gasoline production declined slightly last week compared to the
previous week, averaging over 9.3 million barrels per day, while distillate fuel
production increased slightly, averaging 4.3 million barrels per day.

U.S. crude oil imports averaged over 10.1 million barrels per day last week, up
997,000 barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged over 9.4 million barrels per day, or 550,000 barrels
less than averaged over the same four-week period last year.  Total motor
gasoline imports (including both finished gasoline and gasoline blending
components) last week averaged nearly 1.3 million barrels per day. Distillate
fuel imports averaged 385,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) declined by 1.3 million barrels compared to the previous
week.  However, at 319.7 million barrels, U.S. crude oil inventories remain
above the upper end of the average range for this time of year.  Total motor
gasoline inventories rose by 5.6 million barrels last week, and are in the
middle of the average range.  Distillate fuel inventories increased by 2.0
million barrels, and are in the upper half of the average range for this time of
year.  Increases were seen in both high-sulfur distillate fuel (heating oil)
inventories and diesel fuel inventories (a combination of ultra-low-sulfur and
low-sulfur).  Total commercial petroleum inventories rose by 1.8 million barrels
last week, and are above the upper end of the average range for this time of
year.

Total products supplied over the last four-week period has averaged nearly 20.9
million barrels per day, or 3.0 percent less than averaged over the same period
last year.  Over the last four weeks, motor gasoline demand has averaged over
9.3 million barrels per day, or 0.5 percent above the same period last year. 
Distillate fuel demand has averaged nearly 4.3 million barrels per day over the
last four weeks, or 1.3 percent below the same period last year. Jet fuel demand
is down 8.1 percent over the last four weeks compared to the same four-week
period last year.

Total SA and Sociedade Nacional de Combustiveis de Angola said Wednesday they made an oil discovery in the ultra-deep waters of the Angolan offshore that tested at a rate of 3,686 barrels per day.

The Salsa-1 exploration well was drilled in a water depth of 1,806 meters (5,925 feet), Total said in a statement. Technical studies are under way to evaluate the results from the tests, and further exploration drilling is under way and planned across the area.

Sonangol, the state oil company, holds the concession rights for the area where the test well was drilled. The contractor group is formed by Total, which holds a 30 percent interest; Sonangal with 20 percent and Marathon Oil Co. with 30 percent.