LONDON, (AP) – Oil prices fell to trade around $55 a barrel Tuesday in a market expecting more mild weather and rising inventories in the United States.
Light, sweet crude for February delivery dropped 77 cents to $55.32 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. February Brent crude at London’s ICE Futures exchange fell 67 cents to $54.95 a barrel.
The Nymex contract had fallen 22 cents to settle at $56.09 a barrel Monday on record high January winter temperatures in the U.S. Northeast. The volatile session saw crude rise as high as $57.72 on reports that OPEC oil ministers are considering another cut in output, and worries that a dispute between Russia and Belarus could result in energy shortages in parts of Europe.
Nigeria’s oil minister Edmund Daukoru discouraged talk of any immediate action to support prices by OPEC, which recently resolved to cut output by 1.7 million barrels per day.
“Let’s implement the 1.7 million fully then we’ll see if there’s a need for additional cuts,” Daukoru told Dow Jones Newswires.
If OPEC announced another production cut — on top of the 1.2 million barrel-a-day reduction that began in November, and the 500,000 barrel-a-day cut set to begin Feb. 1 — prices would likely rise. Still, OPEC’s previous cuts haven’t been able to keep crude prices above $60 a barrel for long, largely because many traders doubt that the cuts are fully enforced.
Forecasters expect temperatures in the U.S. Northeast, the world’s largest heating oil market, to drop to normal levels over the next couple of weeks.
Heating oil futures fell more than half a cent to $1.5498 a gallon while natural gas rose 6.2 cents to $6.440 per 1,000 cubic feet.
Analysts surveyed by Dow Jones Newswires expect U.S. petroleum inventories to rise in government data to be released Wednesday by the U.S. Energy Department. Crude inventories were expected to climb an average of 820,000 barrels, the survey showed.
Crude stocks normally fall this time of year, but with imports rebounding from a recent slump, inventories are likely to rise, said analyst Phil Flynn of Alaron Trading Corp. in Chicago.
Petroleum product stocks are expected to increase for the fourth straight week. Distillate stocks, which include heating oil and diesel fuel, are seen rising by an average of 1.9 million barrels while gasoline stocks are projected to increase by 2.5 million barrels.