Predictions of warmer US weather, particularly in the key Northeast markets, weakened energy futures markets Monday.
Milder weather is predicted for the whole country this week, but the temperature increase in the Northeast US is expected to have more influence in damping demand for fuel.
The weather outlook affected natural gas futures the most, analysts said, as the February gas contract tumbled 96.3� to $6.29/Mcf on the New York Mercantile Exchange.
Home heating oil for February delivery plunged 3.36� to 81.2�/gal, while unleaded gasoline for the same month dropped 1.01� to 87.54�/gal.
The March contract for benchmark US sweet, light crude fell 71� to $29.06/bbl on the NYMEX. The April crude contract was down by 52� to $28.25/bbl. Both contracts continued to slide in after-hours electronic trading, down to $28.95/bbl and $28.20/bbl, respectively.
In London, North Sea Brent crude futures fell below $27/bbl on the International Petroleum Exchange as a result of profit taking. But analysts said that doesn�t necessarily signal the start of a bearish trend, since supply remains tight and demand buoyant.
The March contract for Brent oil closed at $26.60/bbl, down 38� for the day, after trading in a range of $26.25-$27.48/bbl.
However, the February natural gas contract gained 6� to the equivalent of $4.06/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries� basket of seven crudes lost 15� to $24.99/bbl Monday.
Weather forecasts are likely to continue directing market activity in the absence of other fresh factors because the markets need some volatility, analysts said.
Meanwhile, the American Gas Association is expected to report this week a withdrawal of 90-110 bcf of gas from US underground storage during the week ended Jan. 26. That compares with withdrawals of 242 bcf at the same period a year ago and 78 bcf in 1999.
It would narrow the year-over-year storage deficit to less than 500 bcf, or about 28% below a year ago, 12 weeks into the traditional heating season, said officials at Salomon Smith Barney Inc.
