Skip to comments.Oil Prices Skid as U.S. Winter Stays Mild ($42.59/bbl)
Posted on 01/03/2005 2:10:18 AM PST by RWR8189
SINGAPORE (Reuters) - Oil prices slid on Monday on expectations that more mild U.S. weather at the start of the New Year will limit heating oil demand.
U.S. oil prices (CLc1: Quote, Profile, Research) dropped 79 cents to $42.66 a barrel by midday trading in Asia.
London's International Petroleum Exchange (IPE) was shut for a holiday and will reopen on Tuesday.
The winter has been unusually warm thus far in the U.S. Northeast, the world's biggest heating oil market, and normal to above-normal temperatures are expected to prevail over the next few days, forecasters Meteorlogix said.
"Weather has been the achilles heel of this market," said John Brady of ABN AMRO in New York. "But it is winter in the Northeast, eventually we'll get another cold blast... Until we do the market's going to feel very weak."
Mild temperatures should limit the use of household heating oil, giving refiners time to boost inventory levels as the world's biggest oil consuming country enters what is usually the coldest month of the year.
A cold snap helped draw down heating oil inventories by 1 million barrels in the week to Dec. 24, but they are still more than 12 percent lower than the same time a year ago due in part to strong demand for diesel fuel, U.S. data showed.
Oil prices soared 34 percent over 2004, boosted by a mix of unexpectedly strong demand growth, limited spare refining and production capacity and anxiety over Middle East output.
Last week in Saudi Arabia, suicide bombers tried to storm the kingdom's Interior Ministry and a security unit in the capital Riyadh on Wednesday, reviving supply worries from the region.
Iraqi stop-start oil exports through its northern pipeline to Turkey have been idle for two weeks due to sabotage attacks.
But oil is down $13 from its all-time peak of $55.67 a barrel, touched just over two months ago, as dealers factored in unusually mild winter weather in the northern hemisphere and the potential impact of higher fuel costs on global economic growth.
Fearing a counter-season winter build in inventories, OPEC producers agreed last month to trim 1 million barrels per day of excess supply from Jan. 1.
Over the last month prices have settled into a $40 to $45 range, but traders warn that a dip back into the $30s -- last seen in July -- could precipitate a broader sell-off as speculative players leap back in to follow the bearish trend.
"As far as market sentiment goes, it will be very negative if we go back into the $30s," said Brady.
But forecasts for a colder-than-usual first quarter may keep traders from selling too aggressively for fear that a late cold snap could strain supplies, he added.
|1/03/05 Session Contract Detail for February 2005|
This topic is from 2005, back when it was important to yammer away about oil prices because GWB was president. Like the WOT body count, it ceased to be important in 2008. Notice also the four topmost topics at this keyword, including this one, how low the price was and how little it fluctuated.
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