Nymex January crude oil surging Monday to return firmly above $60 as the season’s first snows and continued cold temperatures chill the Northeast. With OPEC meeting Dec. 12 and expected to continue to pump at current levels, future moves will be based on weather-related demand, expectations of weather-related demand or lack of weather-related demand.

The key: how will commodity funds - with significant short positions - align themselves heading into the new year. Oil analyst Kevin Norrish and others at Barclays Capitaltell investors Monday:

Speculators have historically never held such substantial short positions in commodity markets. Aggregate net length across the major US commodity futures markets rose again to a fresh all-time high last week of almost 975,000 lots. These short positions are concentrated in energy and grain markets where funds are net short, but there are also significant gross short positions in copper and gold. Given the improving economic outlook for 2006 and the strong fundamentals in many sectors, we suspect that year-end short covering could add additional upside price risk for many commodities over the next few weeks.

Barclays said ‘’increasingly positive demand picture for US gasoline'’ also suggests more short-covering. US benchmark WTI crude expected to average $62.60 in 4Q ‘05, slipping to $58 in 1Q ‘06 before gaining to $62.1 in 2Q ‘06.