NEW YORK - Oil prices slumped below $60 a barrel on Monday as unusually warm temperatures in the US Northeast capped heating oil use, adding to worries high world energy prices had slashed demand growth.
US crude CLc1 settled down $1.46 to $59.76 a barrel - the lowest settlement since
July 27. London Brent crude LCOc1 was down $1.32 at $58.10 a barrel.
"The market is lower as weather forecasts are considered rather bearish through the middle of the month," said Kyle Cooper, an analyst at Citigroup in Houston.
US demand for heating oil is expected to be about 30 per cent below normal this week as temperatures in the US Northeast warm up after an early chill, according to the US National Weather Service.
A slow start to the winter heating season would compound widespread worries that historically high energy costs are cutting into demand growth.
"If you look at statistics every week, there's a drop in demand year-on-year. People are focusing on that," said Tony Nunan, a manager at Mitsubishi Corp.'s risk management.
The most recent figures from the US Energy Information Administration show fuel demand in the world's largest energy consumer lagging more than 2 per cent below a year ago.
But some analysts are skeptical that the demand slowdown will last, with signals that the US economy is holding up well under the strain of high energy costs. The US economy logged faster-than-expected 3.8 per cent annual growth in the third quarter.
Additional signs that Chinese crude demand is rising after a tepid start to the year should also support prices.
"When the oil market notices that China is back, and remembers the fire that China's exploding oil demand lit under prices last year, the 'China factor' alone should be sufficient to floor near-term prices," said Deborah White, senior energy analyst SG Commodities in Paris.
TIGHT SUPPLIES
The Northern Hemisphere winter is approaching at a difficult time for the US oil industry, with refiners and producers still struggling to restore operations after being battered by hurricanes in the Gulf of Mexico.
Lost heating oil output and high natural gas prices have led to concerns in some quarters that Americans could run short of heating fuels in a winter cold snap.
Repairing all the damaged rigs, platforms and pipelines in the Gulf of Mexico damaged by hurricanes Katrina and Rita will take up to a year and crude oil output will not return to normal until the end of March, US Interior Secretary Gale Norton said last week.
Some 67.72 per cent of the Gulf's 1.5 million bpd of crude production stayed shut, along with 54.27 per cent of the region's 10 bcfd of natural gas output, the MMS said.
Since Aug. 26, hurricanes have shut some 74.7 million barrels of crude production - the equivalent of more than three-and-a-half days of US consumption - and 381.1 bcf of natural gas production, the MMS detailed.
On shore, four refineries remained completely shut by the hurricanes, amounting to just over 1 million bpd of processing, or 6 per cent of US capacity.
Oil traders are also closely monitoring a strike threat at Europe's largest refinery, Shell's 418,000-barrels per day Pernis plant in Rotterdam.
Workers were set to go on strike on Monday over pension demands, threatening to disrupt Europe's supply of distillates ahead of winter.
- REUTERS
NEW YORK - Oil prices slumped below $60 a barrel on Monday as unusually warm temperatures in the US Northeast capped heating oil use, adding to worries high world energy prices had slashed demand growth.
US crude CLc1 settled down $1.46 to $59.76 a barrel - the lowest settlement since
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