Crude oil price falls to 15-month low
NEW YORK (Bloomberg) — Crude oil fell the most since August 2005 in New York on forecasts for an increase in OPEC oil shipments and a warmer-than-normal winter that would curb demand.Oil shipments from OPEC members will rise this month, according to a weekly report by Halifax, England-based consulting company Oil Movements. The Organisation of Petroleum Exporting Countries agreed last month to cut output by 1.2 million barrels a day. US government forecasters said yesterday the El Nino weather pattern will cause a mild winter in the northern US.
“The Oil Movements report added uncertainty about OPEC’s cuts back into the market,” said John Kilduff, vice president of risk management at Fimat USA in New York. “We saw a lot of fund liquidation after the report today. The surging stock market has attracted a lot of the dollars that would otherwise be moving into energy markets.”
Crude oil for December delivery fell $2.50, or 4.3 percent, to $56.26 a barrel on the New York Mercantile Exchange, the lowest close since November 18, 2005. Oil had the biggest one-day decline since August 17, 2005. Prices are down 2.8 percent from a year ago.
Investors pushed prices higher the past four years as they poured money into energy, where returns outpaced other markets.
US stocks rose for a fifth day and are heading for the seventh weekly advance in the past eight weeks. Above-average temperatures will cover the northern third of the US from coast to coast this winter as El Nino persists, the US Climate Prediction Center said in a report that covers December through February. A warmer-than-normal winter in the region would reduce demand for heating oil, natural gas and other fuels used to run household and commercial furnaces.
El Nino refers to the warming of the ocean surface off the western coast of South America. The phenomenon affects the jet stream, alters storm tracks and creates unusual weather patterns. A moderate to strong El Nino typically brings mild winters to the northern US.
OPEC shipments will rise 0.9 percent in the month to Dec. 2 to 24.8 million barrels a day, compared with 24.6 million barrels a day in the four weeks ended November 4.
OPEC will discuss production at its next meeting, which is scheduled for December 14 in Abuja, Nigeria.
Natural-gas stockpiles rose 5 billion cubic feet to 3.45 trillion cubic feet last week, an Energy Department report showed. Some users switch between oil-based fuels and natural gas depending on cost. Crude-oil supplies rose last week, the department said yesterday.
“We are building natural-gas supplies as we get closer to winter, which is bearish,” said Ric Navy, a broker at BNP Paribas SA in New York. “Also, yesterday’s report showed a big gain in crude oil. There’s just too much stuff around for prices to move higher.”
