Oil above $58

Oil prices climb above $57 a barrelNEW YORK (AFX) - Oil prices rebounded above $57 a barrel Wednesday, extending Tuesday's spike as traders brushed off gains in U.S. crude and gasoline supplies and refocused on heating fuel demand and upcoming OPEC production cuts.Trading was highly volatile, dropping by more than $1 right after the weekly inventory report's release, and then rising again -- continuing the energy market's recent roller coaster ride that has seen the price of a barrel of crude oil swing from $61 to $50 and back up to $57 in a single month.The huge movements reflect traders weighing ample supplies around the world against the likelihood that demand will surge as cold weather returns and U.S. economy chugs along more robustly than expected, and the potential for OPEC to slash more production.The Organization of Petroleum Exporting Countries begins its second round of production cuts, announced late last year, on Thursday."Whether or not they comply fully, psychologically, it's still important," said Chip Hodge, an energy portfolio manager with John Hancock Financial Services.The energy market has been skeptical about whether OPEC was enforcing the reductions it's promised, but recent comments out of Saudi Arabia, OPEC's biggest producer and exporter, have suggested that the cartel's members are indeed decreasing their oil production.Light, sweet crude for March delivery rose 30 cents to $57.27 in afternoon trading on the New York Mercantile Exchange, after dropping as low as $55.75 and rising as high as $57.80.Brent crude for March delivery rose 16 cents to $56.55 a barrel on the ICE Futures exchange in London.Nymex heating oil futures for February rose 1.71 cent to $1.6551 a gallon, while February gasoline futures fell 1.88 cent to $1.5025 a gallon. The contracts expire on Wednesday.Meanwhile, natural gas futures fell 10 cents to $7.635 per 1,000 cubic feet.The choppy trading followed huge price jumps on Tuesday. Crude oil traded as high as $57.05 before settling at $56.97 a barrel, a gain of $2.96. Natural gas had soared more than 80 cents, or 11.6 percent, on forecasts that predict temperatures will dip below freezing in the U.S. Midwest, the heart of the natural gas market.On Wednesday, the Energy Information Administration said in its weekly report that crude oil inventories rose last week by 2.7 million barrels to 324.9 million barrels.Gasoline inventories rose by 3.8 million barrels to 224.6 million barrels, while distillate inventories -- which include heating oil and diesel fuel -- fell by 2.6 million barrels to 140.0 million barrels. A decrease in heating oil surpassed a small increase in diesel fuel.The results were close to what most traders were expecting, and reaffirmed the belief that U.S. supplies of crude and gasoline remain abundant, but recent cold weather has been eating into heating fuel supplies.Colder-than-normal temperatures are expected through mid-February in the U.S. Northeast, which is responsible for 80 percent of the country's heating oil consumption.The EIA said Wednesday that residential heating oil prices rose for the first time in six weeks in the period ending Jan. 29. The average residential heating oil price increased by 2.7 cents per gallon last week to reach 236.0 cents per gallon -- which is 10.1 cents lower than last year at this time.