Oil prices drop as temperatures rise in northeast
(Xinhua)
Updated: 2005-11-29 09:34

Crude futures dropped more than one dollar a barrel Monday as the unseasonable temperature in the northeastern part of the United States quelled worries about greater fuel demand this winter.

New York's main contract, light sweet crude for delivery in January, tumbled 1.36 dollars to 57.35 dollars per barrel in closing deals. In London, the price of Brent North Sea crude for January delivery fell 19 cents to close at 54.82 dollars per barrel on the ICE Futures exchange.

Oil and gas prices have been largely linked to weather patterns in the American Northeast, the world's biggest market for heating oil. Energy prices made a brief advance last week as meteorologists tracked a winter storm that was expected to catapult heating oil demand in the region.

But AccuWeather.com forecast rising temperature Monday, reducing fears of heating oil shortages. Those concerns were further eased by last week's Energy Department reports that US energy stockpiles were expanding as demand held steady.

However, weather forecasters warn that another cold snap could be on its way to the Northeast. A snowstorm currently battering some western and Midwest states is projected to head east and send temperatures plunging by the end of this week.

Elsewhere traders were digesting comments by OPEC president Sheikh Ahmad Fahd al-Sabah, who on Monday said that oil producers would raise their production capacity to ensure continuity of crude supplies despite efforts by world consumers to restrain demand.

"OPEC is pumping investments to raise its output capacity from 32 million barrels per day (bpd) to 38 million bpd over the next five years," said the OPEC chief, who is also Kuwait's Energy Minister.

Earlier at the same gathering, Saudi Oil Minister Ali al-Nuaimisaid world oil markets were "well balanced" and OPEC would consider options based on the current "comfortable" situation.

But experts warned oil prices could spike in the event of a cold blast in the Northeast or other major fuel-consuming region in the Northern Hemisphere and said the market was monitoring the weather closely.