Crude futures fell sharply on Monday on the first trading day of the new year as milder winter weather across the north-eastern United States eased demand on heating oil in the high-usage area.
Mid-morning in Asia, crude for February delivery fell 70 cents to $42,72 per barrel in electronic trade on the New York Mercantile Exchange from Friday’s settlement. Benchmark light, sweet crude had closed 2004 at $43,42 in New York.
Heating oil, meanwhile, traded at $1,2261 per gallon, down a tad in Asian trading.
Prices spiked last week after militant attacks in Riyadh, Saudi Arabia, sent jitters through the market on fears the crucial supply chain might be broken in the world’s leading crude exporter.
Last month, al-Qaeda terror network leader Osama bin Laden urged militants to strike at oil pipelines in the Middle East that could potentially hurt exports to the US.
Despite falling more than $12 per barrel since hitting record highs in late October, the price of crude remains just less than 30% higher compared with year-ago levels.
Distillate levels in the US — the world’s largest energy consumer — are lower than a year ago, and colder weather sparks higher demand for heating fuel, especially in the north-west areas.
Distillates include heating oil, diesel and jet fuel, all premiums as winter bites in the northern hemisphere.
Forecaster Accuweather said on its website on Monday that cold weather will hit the US mid-week from Canada, but will only reach the upper Midwest and the northern Great Lakes area.
Elsewhere, saboteurs struck an oil pipeline in Iraq over the weekend, damaging infrastructure crucial for infrastructure money to rebuild the war-ravaged country.
On Friday, interim Prime Minister Ayad Allawi said that attacks by insurgents on Iraq’s oil infrastructure had cost the country about $10-billion in the past five months. — Sapa-AP