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Oil prices drop as temperatures rise in northeast
(Xinhua)
Updated: 2005-11-29 09:34
Crude futures dropped more than one dollar a barrel Monday as the
unseasonable temperature in the northeastern part of the United States quelled
worries about greater fuel demand this winter.
New York's main contract, light sweet crude for delivery in January, tumbled
1.36 dollars to 57.35 dollars per barrel in closing deals. In London, the price
of Brent North Sea crude for January delivery fell 19 cents to close at 54.82
dollars per barrel on the ICE Futures exchange.
Oil and gas prices have been largely linked to weather patterns in the
American Northeast, the world's biggest market for heating oil. Energy prices
made a brief advance last week as meteorologists tracked a winter storm that was
expected to catapult heating oil demand in the region.
But AccuWeather.com forecast rising temperature Monday, reducing fears of
heating oil shortages. Those concerns were further eased by last week's Energy
Department reports that US energy stockpiles were expanding as demand held
steady.
However, weather forecasters warn that another cold snap could be on its way
to the Northeast. A snowstorm currently battering some western and Midwest
states is projected to head east and send temperatures plunging by the end of
this week.
Elsewhere traders were digesting comments by OPEC president Sheikh Ahmad Fahd
al-Sabah, who on Monday said that oil producers would raise their production
capacity to ensure continuity of crude supplies despite efforts by world
consumers to restrain demand.
"OPEC is pumping investments to raise its output capacity from 32 million
barrels per day (bpd) to 38 million bpd over the next five years," said the OPEC
chief, who is also Kuwait's Energy Minister.
Earlier at the same gathering, Saudi Oil Minister Ali al-Nuaimisaid world oil
markets were "well balanced" and OPEC would consider options based on the
current "comfortable" situation.
But experts warned oil prices could spike in the event of a cold blast in the
Northeast or other major fuel-consuming region in the Northern Hemisphere and
said the market was monitoring the weather closely.
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