Crude futures fell on Tuesday in thin post-Christmas trading, as forecasters in the United States said the weather would be milder in the week ahead, raising traders’ expectations of lower demand for heating fuels.
Light, sweet crude for February delivery slipped 82 cents to $57,60 a barrel on the New York Mercantile Exchange in Asian electronic trading midmorning in Singapore. The contract on Friday rose by 15 cents to settle at $58,43 a barrel. On Monday, the market was closed for Christmas, which fell on Sunday.
According to Accuweather.com, temperatures in most of the US apart from the north-west will be higher than normal in the next six to 10 days.
”The weather is unusually passive for late December,” the forecaster said.
Milder weather in the world’s largest energy consumer means less heating fuel consumption, which tends to put a downward pressure on oil prices.
Crude futures have in recent weeks been reacting to fluctuations in northern-hemisphere temperatures, especially in the US north-east, the world’s biggest heating-oil market.
”Ever since winter officially began last week, the weather in the north-east (and across much of the country) has gone the other way. It’s not that we’re having a heat wave in the north-east, but we are certainly in a different regime than we were earlier in the month,” said Accuweather forecaster Elliot Abrams in a report.
Abrams said he did not expect any more snow storms to hit the country in 2005.
Tuesday, Nymex heating oil lost 2,48 cents to $1,6805 a gallon (3,8 litres), while gasoline declined 1,85 cents to $1,5320 a gallon.
Natural gas, which is most commonly used to heat homes in the Midwest, slipped 84,5 cents to $11,438 per 1 000 cubic feet. The contract reached an all-time high of $15,78 per 1 000 cubic feet in mid-December on cold weather and predictions of snow storms.
The price of crude is 19% below its all-time high of $70,85 after Hurricane Katrina made landfall on August 30.
Traders were also awaiting the midweek release of a US government supply report.
Last week, the US petroleum snapshot showed the supply of crude oil rose by 1,3-million barrels to 322,5-million barrels — 12% above year-ago levels.
But US inventories of distillate fuel, which include heating oil and diesel, fell by 2,8-million barrels to 127,7-million barrels. Gasoline inventories declined by 300 000 barrels to 204,1-million barrels. — Sapa-AP