Oil drops below US$96 a barrel on improving weather; natural gas price plunges
NEW YORK, N.Y. - The price of oil fell below US$96 a barrel Monday amid forecasts for moderating temperatures in the U.S. Northeast and anticipation about the outcome of the next meeting of the U.S. Federal Reserve.
Benchmark West Texas Intermediate crude for March delivery fell 92 cents to close at US$95.72 a barrel on the New York Mercantile Exchange.
Along with oil, the prospects of a break in the deep chill that has enveloped the U.S. upper Midwest, the Northeast and parts of the South sank the price of natural gas. Futures dropped 34 cents, or 6.5 per cent, to $4.85 per 1,000 cubic feet, partly reversing last week's surge above $5.
"There did appear to be enough of a shift toward normalization (in temperatures) within the heavily populated northeast quadrant to spur a heavy dose of profit-taking," wrote Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.
The Federal Reserve meets later this week and officials are widely expected to reduce the central bank's monthly bond buying that has underpinned the economic recovery.
So far, the reduction has been minimal. The Fed has cut the amount of bonds it buys each month by $10 billion to $75 billion but many economists think the stimulus could end this year if the U.S. economic recovery gains steam.
The International Monetary Fund's managing director, Christine Lagarde, warned on the weekend of the risks posed to global economic recovery from phasing out the U.S. stimulus too rapidly and deflation in Europe.
Also, less monetary easing in the U.S. could boost the dollar, making oil less affordable for holders of other currencies.
Brent crude, used to set prices for international varieties of crude, fell $1.19 to US$106.69 on the ICE exchange in London.
In other energy futures trading on Nymex, wholesale gasoline was down four cents at US$2.62 a U.S. gallon (3.79 litres) and heating oil was down five cents at US$3.09 a gallon.
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