SINGAPORE, Dec 28 (Reuters): Oil prices fell today, ducking back below $58 a barrel as warmer than usual US weather curtailed heating fuel demand.
February crude futures lost 26 cents to $57.90 a barrel in early trade, having eased 27 cents Tuesday, the first session of post-holiday trade. London Brent crude was down 16 cents to $56.13 a barrel.
Prices are up 33 per cent since January and have averaged $56.66 a barrel, almost 37 per cent more than the 2004 average. Analysts forecast a price of $57.34 for 2006, temperatures across most of the United States have been unseasonably warm for the past week and are expected to remain so through the weekend, forecasters say.
Natural gas futures which soared to record-highs near $16 per million British thermal units (mmBtu) in mid-December, have since fallen by about a third as a cold snap passes. The frontmonth contract traded at $10.985 per mmBtu Wednesday.
With warmer weather factored in, dealers will next be looking toward weekly US oil inventory data for direction. The US government report will be released Thursday instead of Wednesday due to the Christmas holiday.
Crude stocks were expected to have slipped 1.2 million barrels while gasoline inventories dipped 300,000 barrels.
Winter heating fuel stocks in Japan, the world's third-largest consumer, fell again last week as frigid weather enveloped most of the country. Kerosene inventories fell more than 8 per cent to about 23.5 million barrels, industry data showed.
Kerosene stocks have fallen by a fifth over the past three weeks, but remain well above the end-December average after a warm start to the season helped build a hefty stock buffer.
Supply concerns eased this week after Royal Dutch Shell said it had managed to restore most of its production in Nigeria after pipeline attacks a week ago.
And the strain of new oil demand-a major factor behind the market's near three-year rally-appeared to lessen in China, where November data showed almost no growth in implied consumption, dimming hopes for a year-end surge.