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Thursday, January 04, 2007
Mild weather leads to fall in international oil prices
Winter lightens up and sees less demand for oil for heating.

The price of crude oil fell below $61 a barrel in New York as mild weather in the United States curtailed the demand for heating. On trader speculation, fuel inventories rose last week.

Warmer-than-normal temperatures in the Northeast of the US will cause heating demand to run by about 44% below normal till January 9, according to one weather forecaster. Stockpiles of distillate fuel, a category that includes heating oil and diesel, rose last week.

Crude oil for February delivery fell by 84 cents, or 1.4%, to $60.21 a barrel on the New York Mercantile Exchange and was traded at $60.35 a barrel in London. Brent crude oil fell by 1 to $59.86 a barrel – its lowest since November 27.

Above-average temperatures will cover the eastern US from January 7 through January 11, the National Weather Service said. The temperature in New York City was 44 degrees Fahrenheit (7 degrees Celsius) at 7:00 a.m., or 5 degrees above the normal mean, according to Meteorlogix LLC.

Distillate fuel inventories rose by 925,000 barrels from 133.6 million barrels last week, following responses from six analysts. Five of the analysts expected an increase and one predicted a decline.

Gasoline inventories probably rose by 1.75 million barrels from 203.9 million last week, according to the survey. All of the analysts expected an increase.

The US Energy Department is scheduled to release its weekly report on petroleum inventories on January 4 at 10:30 a.m. in Washington.

New York-traded crude fell by 64 cents, or 1.1%, yesterday to $60.41 a barrel in electronic trading. Floor trading was closed for the funeral of former US President Gerald R. Ford.

The Organization of Petroleum Exporting Countries (OPEC), producer of 40% of the world's oil, will cut output in February for a second time in three months to try to stem a decline in prices.

OPEC had agreed last month to lower output by 500,000 barrels a day as of February 1. The group had already agreed to cut production by 1.2 million barrels a day starting in November.

New York-traded crude, called West Texas Intermediate, fell by about 22% since touching a record high of $78.40 a barrel in July.

Meanwhile, people are ‘skeptical’ of OPEC’s commitment to implementing the reduction after the group reduced output by only half of the amount pledged in November.

“If they don't reduce production in the spring, prices can go below $50 a barrel,’’ according to Thierry LeFrancois, an energy analyst at the Paris-based Natixis.

OPEC’s basket price, a weighted average of 11 blends produced by OPEC nations, fell by $1.51 cents to $56.50 a barrel on January 1.

Oil surged by 21% during the first half of 2006 amid disruptions of supply from Nigeria and Iraq and concern that Iranian shipments would be reduced because of a confrontation over the country's nuclear program.
posted by a correspondent @ 2:07 AM    
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