Crude-Oil Finishes Below $63
U.S. crude oil futures fell back below $63 a barrel on Monday amid profit-taking after last week's rally. Milder weather forecasts and growing doubts of another OPEC production cut also weighed on prices.
Heating oil and gasoline futures skidded, also giving up chunks of their hefty gains from last week in the wake of a drawdown in fuel stocks and forecasts for colder weather.
For Monday's downturn, traders cited predictions by the National Weather Service for above-normal temperatures next week, including the U.S. Northeast, the key heating oil consuming region, after a cold spell this week.
At the same time, "traders remain unconvinced of the unanimity of OPEC's commitment to another round of production cuts," said Addison Armstrong, an analyst at TFS Energy in Stamford, Connecticut.
Right after the market closed, Kuwait's oil minister, Sheikh Ali al-Jarrah al-Sabah, said it was to early to say whether there is a need for another cut, but added he would not oppose the group if it wanted another reduction.
The group is scheduled to meet in Nigeria on Dec. 14 to decide whether to cut output further, after its agreement in October to cut by 1.2 million barrels a day from Nov. 1.
On the New York Mercantile Exchange, January crude settled $0.99 lower, or 1.56%, at $62.44 a barrel, after tumbling to $61.90, lowest since Wednesday. It peaked last week at $63.77, which marked the highest since $64 on Sept. 28.
In London, ICE January Brent crude ended $1.17 lower, or 1.8%, at $63.45 a barrel, after peaking earlier at $64.75.
The entire U.S. was expected to warm to above-normal temperatures by this weekend and remain above normal for at least the next two weeks, ending the season's first arctic blast that began last week.
The National Weather Service in its six- to 10-day outlook issued Sunday showed nearly the entire nation ranging above normal, with the highest deviation from normal in the Midwest. South Texas and Florida were predicted to average near normal for the period.
The eight- to 14-day outlook valid for Dec. 11-17 also showed the entire country above normal.
In the U.S. Northeast, temperatures will be from 1 to 5 degrees Fahrenheit below normal Monday to Friday, with extended forecasts for the same in the next three to five days after
that, according to forecaster Meteorlogix.
"The cold weather factor appears neutralized for now and the gasoline market is not showing any significant upward pressures," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.
But "the crude market is beginning to exhibit independent strength as a result of the shifting dynamics of a weakening in the value of the U.S. dollar and an associated attempt by OPEC
to offset this dollar weakening by threats to cut output," he added.
OPEC is worried by a fall in the dollar that is eroding member states' oil revenue and ministers will take up the issue when they meet next week in Abuja, Nigeria, to discuss a further cut in output.
Around midday, the dollar steadied near a 20-month low against the euro and a basket of currencies on Monday. A weaker dollar is a bonus for non-dollar oil consumers but a threat to
Last week, Saudi Oil Minister Ali al-Naimi said oil markets were "significantly" out of balance due to high U.S. inventories and that 100 million barrels needed to be removed.
NYMEX January heating oil settled 3.88 cents down, or 2.1%, at $1.8089 a gallon. Last week, heating oil gained more than 18 cents, or nearly 11%.
NYMEX January RBOB ended down 3.90 cents, or 2.3%, at $1.6631 a gallon, after gaining nearly 11 cents, or 7%, last week. January gasoline, the last monthly unleaded gasoline contract being traded on NYMEX, ended 1.81 cents lower, or 1.1%, at $1.6674.
NYMEX January crude resistance remains at $64 with support at $61.15.
Heating oil's resistance lies at $1.87 with support at $1.7485. The crack spread ended down at $13.53.
RBOB resistance was pegged at $1.71 with support at $1.6454. Gasoline resistance remains at $1.70 with support at $1.654. The crack spread ended up at $7.59.