Warm Weather Drives Down Oil

Updated from 12:32 p.m. EST

Energy prices were mostly slipping Monday as the prospect of mild weather across much of the U.S. this week had traders concerned that demand would be soft.

Contracts for light sweet crude lost $1.14 to close at $58.91 a barrel on the New York Mercantile Exchange, while natural gas futures fell 17 cents to $6.91 per million British thermal units.

Heating oil lost 3 cents to $1.68 a gallon, but gasoline added a penny to close at $1.91 a gallon.

"It is warm and it is going to be very warm indeed across much of North America this week," writes Dennis Gartman, editor of The Gartman Letter. He also notes that the term structure for oil prices, with significantly higher prices in the distant future compared with the near contracts, indicates that there are "ample above-ground supplies."

Meanwhile, energy market observers will no doubt be waiting to see what happens Thursday when representatives of the OPEC cartel meet in Vienna to discuss the state of the oil market. Member countries of the organization haven't always adhered to previous mandated output cuts that have been aimed at bolstering prices.

Oil services company Halliburton(HAL Quote) was making the news with an announcement it would shift its headquarters to Dubai from Houston.

"[The] move also illustrates the growing importance of national [Middle Eastern] oil companies to the large global services companies," writes Alan Laws, an analyst at Merrill Lynch in New York. "Many may see it as an attempt to more closely mimic Schlumberger (the most multinational oil service company)."