Oil Falls Below $58 a Barrel as Mild Weather Curbs Fuel Demand
By Mark Shenk
( presently 58.40 as of this post-maxc)
Feb. 20 (Bloomberg) -- Crude oil fell below $58 a barrel as warmer weather moved into the eastern U.S. and Europe, curbing heating-fuel consumption.
Temperatures in New York are forecast to rise to 50 degrees Fahrenheit (10 Celsius) today, 8 degrees above normal, the National Weather Service said. U.S. refineries begin maintenance programs in late February before gasoline demand increases with the arrival of the driving season in May. Valero Energy Corp.'s McKee refinery in Texas was shut on Feb. 16 because of a fire.
``Refiners are shutting units because of lower demand and preparing for the gasoline season,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``If the recent refinery problems occurred during gasoline season, prices would be higher.''
Crude oil for March delivery fell $1.59, or 2.7 percent, to $57.80 a barrel at 12:17 p.m. on the New York Mercantile Exchange. The March contract expires today. The more-active April contract declined $1.46, or 2.4 percent, to $58.40 a barrel. Prices are down 5.3 percent from a year ago.
There was no floor trading yesterday because of the Presidents Day holiday. Electronic trading was unaffected by the holiday. There was no settlement price yesterday.
Daily price swings in crude oil futures are widening. Futures fell or rose more than 1.5 percent on 26 trading days in the past two months compared with 15 days in the same period a year earlier, according to data compiled by Bloomberg.
U.S. gasoline use peaks between late May's Memorial Day holiday and Labor Day in early September.
Warmer Weather
``It's much warmer than it has been,'' said Joel Burgio, a forecaster for Meteorlogix LLC in Lexington, Massachusetts. ``Friday and Saturday will be about 3 to 6 degrees below normal in the Northeast and then moderate again next week. This is nothing compared with what we had the last couple weeks.''
Thermometers plunged to 12 degrees Fahrenheit (-15 Celsius) yesterday, 17 degrees below normal. Temperatures along the East Coast are expected to be above normal from Feb. 25 through March 5, according to the National Weather Service.
``The normal highs are rising at between 1 and 2 degrees a week right now and that will accelerate to 2 to 3 degrees when we get into March,'' Burgio said. ``The coldest temperatures in the Northeast usually occur between the third week of January and the first week of February.''
Temperatures in London may climb to 12 degrees Celsius (54 Fahrenheit) tomorrow from today's high of 9 degrees, the British Broadcasting Corp. said on its Web site. The normal daily high temperature at this time of year is 7 degrees, according to weather data on Bloomberg.
Heating oil for March delivery plunged 4.73 cents, or 2.8 percent, to $1.6261 a gallon in New York. Futures touched $1.6055, the lowest intraday price since Jan. 30.
Heating Season Ends
``The warmer weather is concentrating minds on the fact that the end of heating season is near,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Crude-oil supplies should build in the next couple of months as refineries perform maintenance.''
Iran, the world's fourth-largest oil producer, has the ``right'' to pursue its nuclear program, Iranian President Mahmoud Ahmadinejad said today, rejecting the request of a United Nations Security Council to halt uranium enrichment by tomorrow.
The Security Council unanimously voted Dec. 23 to impose sanctions on Iran over the program, including a ban on the acquisition of materials and technology that might be used to build nuclear weapons. The UN also froze the assets of individuals and groups associated with the program and gave Iran 60 days to halt enrichment.
The U.S. accuses Iran of trying to develop nuclear weapons. Iran, which holds the world's second-largest oil and natural-gas reserves, denies it is seeking a bomb and says the aim of its program is to enrich uranium to fuel power stations, as permitted under the terms of the Non-Proliferation Treaty.
U.S. Force Buildup
A U.S. aircraft carrier battle group led by the USS John C. Stennis arrived in the Persian Gulf region as part of a buildup of forces amid heightened tension with Iran. The Nimitz-class Stennis arrived in the region Feb. 15 to join the USS Dwight D. Eisenhower as the second aircraft carrier battle group in the region, the U.S. Navy's Fifth Fleet said today.
Almost a quarter of the world's oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.
Brent crude oil for April settlement fell 65 cents, or 1.1 percent, to $57.49 a barrel on the London-based ICE Futures exchange. Yesterday, the Brent contract fell 81 cents, or 1.4 percent, to $58.14 a barrel.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net . |
