Crude oil futures fell Tuesday as unseasonably mild weather along the U.S. East Coast spurred hopes that this year's Northern Hemisphere winter could be warmer than expected, weakening demand for heating fuel.
Light, sweet crude for January delivery on the New York Mercantile Exchange lost 31 cents to US$57.05 a barrel in Asian electronic trading. The contract fell US$1.36 to settle at US$57.35 a barrel Monday.
In recent week, the market has been fixated on weather patterns in the Northeastern U.S., the world's biggest heating fuel market. A colder winter could lead to higher crude prices. Heating oil fell 0.56 cents to US$1.6300 a gallon (3.8 liters) while gasoline inched down marginally to US$1.4180 a gallon.
But many analysts expect the current mild weather to be short-lived. A snowstorm currently battering some western and midwest states is projected to head east and send temperatures plunging by the end of this week, according to AccuWeather.com.
Also weighing on prices were expectations a midweek U.S. government petroleum inventories report would show an increase in fuel supply in the week ended Nov. 25, as refinery runs rose. Ten energy analysts surveyed by Dow Jones Newswires forecast a rise in distillate stocks of 595,000 barrels on average, while gasoline stocks were expected to climb by 755,000 barrels on average. Distillate inventories include heating oil and diesel fuel.
Refinery utilization was expected to show another significant increase, with nine of the 10 analysts projecting runs to increase anywhere from 0.25 of a percentage point to 2 percentage points above last week's 88.1 percent of operable capacity.
Crude inventories were expected to fall about 220,000 barrels in government and industry data this week, according to the average estimate of analysts polled Monday.
Meanwhile, Saudi Arabian Oil Minister Ali Naimi on Monday said the international oil market was "balanced," and the inventories were "comfortable for consuming countries," but he would not say if the Organization of Petroleum Exporting Countries would cut production at its meeting in Kuwait City next month, the AP reports. Cartel members are pumping some 30 million barrels a day, and they have a spare capacity of 2 million barrels a day.