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Oil prices drop below US$59 a barrel Commodities strategist doesn’t see anything that could push prices either way; upside pressure potential ‘quite limited right now’ Gillian Wong Associated Press Writer
Oil prices fell Feb. 21 as traders anticipated a decline in fuel demand after forecasts of warmer-than-average weather in the United States.
Light, sweet crude for April delivery lost 52 cents to US$58.33 a barrel in Asian electronic trading on the New York Mercantile Exchange mid-afternoon in Singapore. The session was quiet, with some Asian traders still away for the Lunar New Year holidays.
The Nymex March crude contract, which expired Feb. 20, fell US$1.32 to settle at US$58.07 a barrel.
Brent crude contract for April delivery fell 46 cents to US$57.52 a barrel on the ICE Futures Exchange in London.
“People are thinking the U.S. weather is going to be much warmer than expected, so heating oil demand should be easing,” said Tetsu Emori, chief commodities strategist with Mitsui Bussan Futures in Tokyo.
The U.S. National Weather Service is forecasting above-normal temperatures in the U.S. Northeast — which consumes 80 percent of the nation’s heating oil — through March 5.
The National Oceanic and Atmospheric Administration also expected fuel demand in the region to be below long-term averages the week of Feb. 18, the first such forecast in a month.
Cold February boosted prices Bitterly cold temperatures in the first weeks of February helped boost oil prices to nearly US$60 a barrel from a 20-month low of US$49.90 on Jan. 18, after an unseasonably warm January.
Emori also said because of a lack of market-moving factors, participants were awaiting the release of U.S. government fuel stocks data due Thursday for price direction.
“At the moment I don’t see any specific factors that could push prices either way,” Emori said. “The upside pressure potential is quite limited right now.”
Data from the U.S. Department of Energy is expected to show domestic crude oil stockpiles rose in the week ended Feb. 16, while distillates are seen falling, according to a Dow Jones Newswires survey of analysts.
Crude oil inventories are expected to build by about 700,000 barrels, according to the mean of nine analysts’ forecasts. Distillates, which include heating oil and diesel, are expected to fall by 2.8 million barrels.
Gasoline inventories are seen building by about 100,000 barrels, according to the analysts’ average.
“This report is likely to reflect some of the coldest temperatures we’ve had” this winter, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Supportive news that Iran may halt its uranium enrichment program and return to negotiations took a back seat to the weather.
One day ahead of a U.N. Security Council deadline, Iran President Mahmoud Ahmadinejad said it was no problem for Iran to halt enrichment, but that “fair talks” demanded a similar gesture from the West.
Traders shrugged off more bullish developments over the weekend, including a fire that caused the shutdown of a U.S. refinery and the kidnapping of three Eastern European oil workers in Nigeria.
Heating oil prices dropped 0.84 cents Wednesday to US$1.6366 a gallon (3.8 liters), while natural gas futures added 2.2 cents to US$7.607 per 1,000 cubic feet.
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