World oil prices wilt on US weather forecasts Agence France-Presse
November 14, 2006
LONDON -- World oil prices slumped Monday below $59 per barrel on forecasts of warmer-than-expected weather in the United States, which is the world's biggest consumer of energy, dealers said.
New York's main contract, light sweet crude for delivery in December, tumbled $1.19 to $58.40 per barrel in pit trading.
In London, Brent North Sea crude for December delivery plunged $1.12 to $58.59 per barrel in electronic deals.
Weather experts are forecasting above-normal temperatures in the northeastern segment of the United States, which has the most voracious appetite for heating fuel in the world.
US weather forecasters Meteorlogix said that demand for heating fuel from the northeastern region would be lower than normal in the week to November 18, which could lead to an increase in levels of distillates stockpiles.
"Many [market participants] decided that with stocks still plentiful and weather conditions predicted to be above normal for the next few days, that prices were unlikely to push much higher," said Sucden analyst Michael Davies. "The market appears happy to remain rangebound for the moment, with the prospect of OPEC cuts supporting prices, but with many market participants waiting for actual evidence of a reduction in output, prices appear to be capped."
On Monday, Saudi Arabian oil giant Aramco informed its Asian customers of a fall in exports in December, following a similar reduction in November, analysts said.
The Organization of the Petroleum Exporting Countries last month said it would cut its total output by 1.2 million bpd, effective Nov. 1, to put a floor under prices that have fallen from record highs above $78 earlier this year. Saudi Arabia is the biggest member of the 11-nation cartel.
However, many traders have remained skeptical about OPEC's ability to implement the reduction in full.
Crude oil prices had sunk Friday on profit-taking after strong gains earlier in the week, and as the International Energy Agency (IEA) trimmed its outlook for 2006 global oil demand growth to 1.1 percent from 1.2 percent.
The Paris-based IEA had meanwhile kept its predictions for 2007 broadly unchanged.
