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NEW YORK--Crude oil prices fell, gasoline dropped to a six-month low and heating oil touched its lowest in four months on forecasts that consumption in the northeast United States will drop below average levels as temperatures rise, according to a Bloomberg report.
Heating demand in the region will be about 15 percent lower than normal this week, Minneapolis-based forecaster Meteorlogix LLC reported. U.S. stockpiles of distillates, including heating oil and diesel, have gained in the past two weekly government reports at a time of year when they usually decrease.
"We're back into a more normal situation and inventories are very comfortable," Richard Savage, global head of commodities research at Bank of America in London, told Bloomberg. "In October, the market got spooked by fear of a gasoline crisis that didn't happen. The same will happen with heating oil."
Crude oil for January delivery fell as much as $1.30, or 2.2 percent, to $57.41 a barrel on the New York Mercantile Exchange. "Supply is outpacing demand," Jason Kenney, an analyst at ING Financial Markets in Edinburgh, told Bloomberg. "Another week without cold weather is another week for stocks to refill, but it's very difficult for prices to go much lower with winter just around the corner."
Crude prices last week rebounded from a five-month low of $55.40 in New York on Nov. 18 as freezing weather prevailed in parts of the United States and Europe. They have still dropped 19 percent from a record $70.85 a barrel on Aug. 30, a day after Hurricane Katrina disabled most U.S. oil production in the Gulf of Mexico.
"Maybe it's the calm before the storm," ING's Kenney said in the report.