WASHINGTON -- Oil prices declined yesterday as warmer-than-usual weather cooled US demand for home-heating fuels.
But in a sign of the market's persistent concern about energy supplies and the possibility of colder weather, a strong sell-off early in the day across the energy complex eventually fizzled.
After falling as low as $58.60, light sweet crude for December delivery settled at $59.47 a barrel on the New York Mercantile Exchange, down $1.11.
Nymex natural gas futures had an even more volatile day, sinking to as low as $11 per 1,000 cubic feet, before reversing course and finishing at $11.873, an increase of 45.8 cents on the day.
In London, December Brent crude futures on the ICE Futures exchange fell $1.21 to $58.04 a barrel.
Oil broker Mike Fitzpatrick of Fimat USA in New York said the mild start to the US winter heating season has magnified a sell-off that was already in motion as oil production and refining facilities in the Gulf of Mexico recovered in the aftermath of hurricanes Katrina and Rita.
Crude futures peaked above $70 on Aug. 30, just a few days after Katrina battered the Gulf coast. Last week they settled below $60 a barrel for the first time in three months.
Fitzpatrick said crude futures could fall another $2 to $3 per barrel if the weather stays warm, but once Americans begin to turn up their thermostats, there will again be upward pressure on energy prices.
And while oil and natural gas production in the Gulf of Mexico is recovering, it is still well below prehurricane levels. The US Minerals Management Service said yesterday that 51 percent of daily oil production and 45 percent of natural gas production in the Gulf of Mexico remained offline.
Nymex December heating oil fell 1.01 cents to settle at $1.7861 a gallon, while gasoline declined less than a penny to settle at $1.5561 per gallon.