Weather whacks oil, natural-gas prices

Weather whacks oil, natural-gas prices

Oil and natural-gas prices fell hard yesterday amid mild winter weather that has depressed demand for home-heating fuels.

Trading volume was light, which exaggerated the moves, analysts said.

U.N. sanctions against Iran that were approved over the weekend could raise concerns about supplies next year, although traders so far appear to have shrugged off the dispute over Tehran’s nuclear ambitions.

Light, sweet crude for February delivery declined $1.31, or 2.1 percent, to settle at $61.10 a barrel on the New York Mercantile Exchange, which reopened yesterday after a three-day closure for the Christmas weekend.

Natural gas dropped 52.2 cents, or 7.9 percent, to settle at $6.113 per 1,000 cubic feet, and heating oil fell 5.87 cents, or 3.5 percent, to settle at $1.6233 a gallon. Unleaded gasoline slid 5.08 cents, or 3.1 percent, to settle at $1.5722 a gallon.

“The weather is taking a big hold of this market,” said Mike Guido, commodity strategist at Societe Generale, who estimated that consumption of home-heating fuels in the Northeast was as much as 30 percent below normal over the last 45 days.

Before the holiday, prices slipped as brokers weighed slower economic growth and expectations of a mild winter – which would slow demand for heating oil – against OPEC’s determination to tighten worldwide crude-oil supplies.

The Organization of Petroleum Exporting Countries said this month that it planned to reduce output by an additional 500,000 barrels a day beginning in February. That comes on top of a previously announced cut of 1.2 million barrels a day.

The market also was watching geopolitical developments in Iran, where the government was expected to decide yesterday whether it would stop cooperating with the International Atomic Energy Association.

Iran has vowed to continue uranium enrichment despite U.N. economic sanctions passed Saturday that were aimed at forcing a rollback in its nuclear program.

Iran insists its nuclear program is intended only to produce fuel for nuclear reactors that would generate electricity, but Washington and some allies suspect its ultimate goal is to create atomic weapons in violation of Iran’s treaty commitments.

Peter Beutel, president of Cameron Hanover Inc., of New Canaan, Conn., said that, although nuclear tensions could send prices higher, more likely “it will take some extended cold weather to get there.”

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