Light Demand Dampens Oil

Crude oil futures sank to a one-month low Wednesday as traders focused on warm weather and lower resulting heating demand.

Light, sweet crude for February delivery fell 76 cents to $60.34 a barrel in New York. Crude is refined into fuels like heating oil. On Wednesday, the contract hit a two-week low on mild weather and Iran's apparent reluctance to follow-up on its threats to slash crude exports in reaction to U.N. sanctions.

On Saturday, the U.N. Security Council voted to slap sanctions against Iran over its refusal to end its nuclear program. Under the embargo, Iran is forbidden from exporting or importing material or fuel used in nuclear development.

Warm weather and high supply levels have been pressuring heating fuels for the past week and sent heating oil and natural gas to new monthly lows. The expiration of the January natural gas contract today also contributed to lower prices.

Natural gas for delivery in January lost 27 cents to finish trading at a fresh 10-week low of $5.83 per million British thermal units. On Tuesday, natural gas closed down at a then-10-week low of $6.11 per million British thermal units. Heating oil dipped 1 cent to $1.60 a gallon, a two-month low.

Mild temperatures are expected to blanket the entire country through Jan. 9, according to the latest two-week outlook from the National Weather Service. The weather has been unseasonably warm this winter in the Northeast, one of the largest users of the fuel, lowering demand and boosting supplies. Natural gas inventories are currently 12% above last year and about 10% higher than the five-year average.