Crude Oil Falls More Than $2


Crude oil fell more than $2 a barrel, the most since November, on expectations demand will drop because of slowing economies in the U.S. and Europe and as warm weather crimped fuel demand in the Northeast.

Energy prices led the decline in commodities after an index of executive and consumer sentiment in countries using the euro slipped to the lowest since March 2006. The European Commission in Brussels released the report today. The National Weather Service forecast higher-than-normal temperatures through Jan. 20 in the Northeast.

Crude oil for February delivery fell $2.57, or 2.6 percent, to $95.34 a barrel at 12:51 p.m. on the New York Mercantile Exchange. Oil is heading for the biggest drop since Nov. 28. Futures reached a record $100.09 a barrel on Jan. 3. Prices are up 69 percent from a year ago.

Home-heating demand in the Northeast, the region responsible for 80 percent of U.S. heating-oil use, will be 34 percent below normal for the next week, said Weather Derivatives, a forecaster in Belton, Missouri.

Heating oil for January delivery fell 7.89 cents, or 2.9 percent, to $2.6046 a gallon in New York. Futures are heading for the biggest decline since Nov. 28.

Oil fell more than $1 in New York on Jan. 4 after a report showed U.S. unemployment jumped to a two-year high. The U.S. and Europe consume more than 40 percent of the world's oil.

Crude oil in New York rose as much as 49 cents earlier when CNN reported that five vessels from Iran's Revolutionary Guard threatened to fire on three U.S. Navy boats on Jan. 5 in the Strait of Hormuz, before retreating. CNN cited the Pentagon.

Almost a quarter of the world's oil flows through the strait, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.

Brent crude for February settlement fell $2.11, or 2.2 percent, to $94.68 a barrel on London's ICE Futures Europe exchange. Futures touched $98.50 on Jan. 3, the highest intraday price since trading began in 1988.


TradingEconomics.com, Bloomberg
1/7/2008 12:19:41 PM