Crude drops below $57 as demand cools a bit
NEW YORK -- Crude futures fell below $57 a barrel yesterday on forecasts that US inventories probably grew in the past week and that high oil prices are dampening global demand.
Light, sweet crude for December delivery fell 71 cents to settle at $56.98 a barrel on the New York Mercantile Exchange -- the lowest settlement price since June 30, when front-month crude settled at $56.50.
December heating oil slipped nearly 5 cents to settle at $1.6809 a gallon; gasoline fell nearly 4 cents to $1.4564 a gallon.
Natural gas fell 4.4 cents to settle at $11.563 per million British thermal units.
In London, December Brent crude slipped 62 cents to settle at $54.10 a barrel on the ICE Futures exchange.
Traders are optimistic about today's US petroleum-inventory report.
Commercial crude inventories are expected to rise 1.3 million barrels, according to the average estimates of 10 energy analysts surveyed Monday by Dow Jones Newswires.
Distillate stocks, which include heating oil and diesel fuel, are expected to increase by 300,000 barrels, while gasoline stocks are expected to rise 1.35 million barrels.
If the report meets those predictions, traders' supply concerns will probably ease, at least for the short term, said John Kilduff, analyst at Fimat USA.
Also fueling downward pressure on oil prices was last week's forecast from the International Energy Agency.
The IEA lowered its 2005 world demand growth estimate by 70,000 barrels a day, to 1.2 million barrels, and its 2006 demand growth estimate by 90,000 barrels a day, to 1.66 million barrels a day.
However, markets remained jittery on concerns that cold weather could drain heating oil stocks and that OPEC may make end-of-year production cuts.
Forecasters predict much lower temperatures -- and higher demand for heating oil -- in the coming week.
Also, traders are starting to worry that the Organization of Petroleum Exporting Countries will cut back on oil production, as it did last year, said Alaron Trading Corp. analyst Phil Flynn.
OPEC boosted oil production after hurricanes Katrina and Rita struck oil facilities in the Gulf region.
''They're more and more concerned they'll have an oil glut," Flynn said. ''OPEC is more than happy to rein in overproduction."
