Crude Oil Falls a Third Day on Forecast for Mild U.S. Weather
By Christian Schmollinger and Gavin Evans
March 12 (Bloomberg) -- Crude oil fell for a third day in New York as forecasts for warmer weather increased speculation that demand for heating fuel will decline.
Temperatures in the U.S. Northeast, the nation's biggest heating oil consuming region, may rise to normal levels in the week ended March 25, the National Weather Service said yesterday. Heating use in New York City may be 15 percent below average this week, forecaster Meteorlogix LLC said yesterday.
``There's been a swing in the seasons,'' said Tobin Gorey, commodity analyst at Commonwealth Bank of Australia Ltd. in Sydney. ``It's stopped being really cold.''
Crude oil for April delivery fell as much as 78 cents, or 1.3 percent, to $59.27 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $59.45 at 11:27 a.m. in Singapore.
The contract fell $1.59, or 2.6 percent, to $60.05 on March 9, the biggest decline in four weeks. Oil reached a one-week high of $62.30 a barrel the day before.
Demand for oil products in the U.S., the world's largest consumer, fell a second time in the week ended March 2, the Energy Department said last week. Total product demand averaged 21.3 million barrels a day, a five-week low, as deliveries of distillates, including heating oil and diesel, fell 4.5 percent.
In London, Brent crude oil for April settlement fell as much as 73 cents, or 1.2 percent, to $60.40 a barrel in electronic trading on the ICE Futures exchange. It was at $60.57 a barrel at 11:01 a.m. Singapore time.
Heating oil for April delivery fell as much as 2.16 cents, or 1.3 percent, to $1.6906 a gallon in after-hours trading and traded at $1.6951 at 11:13 a.m. Singapore time. It fell 2.8 percent to $1.7122 a gallon on March 9, the biggest drop since Feb. 14.
World oil demand usually peaks in the fourth quarter when refiners make heating fuel for the northern hemisphere winter.
``The market has been so dependent on oil demand and heating oil demand particularly,'' said Steve Rowles, an analyst with CFC Seymour Ltd. in Hong Kong. ``In this volatile market, any slowdown in global demand is going to have a larger impact.''
Oil futures fell to a 20-month low of $49.90 on Jan. 18 after mild weather in the U.S. northeast cut demand and helped swell stockpiles. Prices rose in five of the past seven weeks as a cold snap boosted heating demand and gasoline demand rose above year-earlier levels.
U.S. gasoline demand rises during the nation's summer vacations between Memorial Day late May and Labor Day early September.
Implied demand rose 0.8 percent to 9.2 million barrels a day in the week ended March 2, the Energy Department said last week. Deliveries from refineries and terminals averaged 9.1 million barrels a day the past four weeks, 3.3 percent more than a year earlier.
While demand appears strong, the weekly data are volatile and may also have been influenced by the unusual weather patterns in the U.S. the past three months, Gorey said.
Gasoline for April delivery fell as much as 3.05 cents, or 1.6 percent, to $1.8716 a gallon and traded at $1.8770 in after- hours trading at 11:08 a.m. Singapore time. The contract fell 1.2 percent to $1.9021 on March 9, after earlier reaching $1.945, the highest price for a contract closest to expiration since Aug. 23.
``From now on, we should closely watch gasoline demand in the U.S. as the main factor to determine the crude price trend, after the northern hemisphere's winter heating oil demand season's over,'' said Ken Hasegawa, a manager of the international division at commodity futures broker Himawari CX Inc. in Tokyo.
Hasegawa expects oil futures in New York to trade in a $58.00-$62.50 a barrel range this week.