NEW YORK – The price of oil closed at the lowest level in eight months Thursday as traders worried about bulging supplies of crude and falling demand for gasoline.
Meanwhile, natural gas prices fell five per cent on forecasts for warmer than normal weather in the coming weeks.
Benchmark West Texass Intermediate crude for February delivery fell 67 cents to close at US$91.66 a barrel on the New York Mercantile Exchange. The price did rise back above $92 in electronic trading after the close, perhaps piggybacking on a move by U.S. stocks into positive territory.
On Wednesday, the U.S. Energy Department said supplies of gasoline rose by 6.2 million barrels last week, a jump of nearly three per cent. Platts, the energy information arm of McGraw-Hill, said the data indicated that demand for gasoline was the lowest in a year.
At the same time, U.S. production of crude oil is the highest in more than 25 years and supplies “are near the upper limit of the average range for this time of year,” the Energy Department said.
As of the close, oil was down nearly seven per cent so far this year.
Natural gas futures plunged 21 cents, or five per cent, to US$4.01 per 1,000 cubic feet. Natural gas last closed below $4 on Dec. 4.
With the U.S. pulling out from a recent spell of extremely cold weather, forecasts are starting to warm up. “Some of these outlooks are tilting increasingly in favour of warmer than normal trends in some parts of the upper mid-continent,” wrote Jim Ritterbusch, president of Ritterbusch and Associates, in a note to clients.
Brent crude, used to set prices for international varieties of oil, dropped 76 cents to US$106.39 on the ICE Futures exchange in London.
In other energy futures trading on Nymex, wholesale gasoline dipped one cent to US$2.64 a U.S. gallon (3.79 litres) and heating oil slipped three cents to US$2.92 a gallon.