Crude oil futures ended sharply lower Monday, falling for the third straight session, amid forecasts for warmer weather in the U.S. Northeast, the key heating oil market, and with traders expecting OPEC to keep output steady at its meeting this week.
Gasoline futures recovered from earlier losses, trading technically, and with traders expecting Wednesday's government inventory data to show another drawdown.
Heating oil stayed down, with its role now being a follower with winter's end coming soon and as gasoline takes leadership ahead of the summer driving season when gasoline demand peaks.
On the New York Mercantile Exchange, April crude settled down $1.14 or 1.9% at $58.91 a barrel after fallling to $58.60 which marked the lowest since $58.07 on Feb. 21. During overnight electronic trading, the contract peaked at $59.96.
NYMEX April RBOB settled up 0.84 cent or 0.4% at $1.9105 per gallon after moving from $1.8646 to $1.93 when it broke resistance at $1.9275. Support was charted at $1.8778.
On Friday, the contract surged to $1.945 which marked the highest since $1.9565 on Aug. 23.
"Gasoline is technically driven. Still, traders don't want to be short, with forecasts calling for a draw in gasoline stocks in Wednesday's inventory report," said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.
NYMEX April heating oil settled ended down 2.99 cents or 1.7% at $1.6823 a gallon, trading from $1.673 to $1.7099. Resistance was charted at $1.75 with support slated at $1.65.
In the U.S. Northeast, the key heating oil market, temperatures were expected to average above normal through Friday, before turning colder again, according to private forecaster DTN Meteorlogix.
Heating load in the region will average below normal through Wednesday, near normal Thursday, near to above normal Friday, it added.
U.S.-wide heating demand was expected to be about 30% below normal this week, due to warmer-than-normal temperatures in much of the country, the National Weather Service predicted in its weekly report.
Last week, heating demand was just over 11% greater than normal as colder weather returned to much of the country, according to the NWS.
"Winter, it seems, could finally be over," said Ed Meir, an analyst at Man Financial in New York.
Traders were watching the Organization of Petroleum Exporting Countries ahead of its Thursday meeting in Vienna. An official of the group said on Thursday that OPEC should not change its oil output at the meeting because existing supply curbs need more time to work.
"Thursday's OPEC get-together will not provide much relief to the oil bulls either. The cartel said it is done cutting for now and will be standing pat," Meir added.
With U.S. government inventory data due Wednesday morning, analysts in a Reuters poll forecast a crude stock build of 1.9 million barrels after the fog-related shipping delays at the Houston Ship Channel eased.
The preliminary poll also called for gasoline stocks to show a draw of 2.4 million barrels, while distillates were expected to have dropped by 1.8 million barrels.
Refinery runs were expected to show an 0.7 percentage point increase, to 86.5% of capacity, the survey showed.
Last week's data showed supplies were ample and at the upper end of average ranges at this time of year, despite multiweek draws on gasoline and distillates and a surprise drop in crude stocks.