Crude Eases as Weather Stays Mild

Updated from 2:44 p.m. EST

Crude prices closed below $60 a gallon Monday as warm weather across the U.S. kept the bulls sidelined.

December crude closed down $1.11 to $59.47 a barrel, after falling $1.20 on Friday. Unleaded gasoline fell 4.95 cents to $1.55 a gallon, while natural gas futures rose 46 cents to $11.87 per million British thermal units. Heating oil fell 1.01 cents to $1.78 per gallon.

"The key continues to be weather," said Bill O'Grady, Assistant Director of Market Analysis at A.G. Edwards. "As long as temperatures are mild, it will act as a depressant to the market. It's just flat-out mild, there's no way around it."

O'Grady said natural gas rose toward the end of the day on the strength of weather reports projecting a normal winter instead of a warmer-than-normal winter in the eastern U.S.

"It gave natural gas a lift," he said. "It didn't do much for crude, but it got it off its lows.

"Cold weather early is much more bullish than cold weather late," O'Grady added. "The fact that we're getting such mild weather is especially bearish. Every day that passes is a day of lost demand that you never get back."

Meanwhile, looking longer-term, the International Energy Agency warned Monday that if current policies do not change, world energy demand is expected to increase by over 50% by 2030. While world resources can meet this demand, the agency said, it will take a $17 trillion investment to bring these resources to consumers.

"In other words, 'We think there's enough there, but we don't know for sure and it's going to take a hell of a lot of investment to get us there,' " O'Grady said.

The report also said oil and gas imports from the Middle East and North Africa will rise, creating greater dependence for IEA countries and large importers such as China and India.

The restart of refineries in the storm-battered Gulf of Mexico continues. The U.S. Minerals Management Service said Monday's shut-in oil production was 773,097 barrels of oil per day, the equivalent to 51.54% of the gulf's daily oil production. The shut-in gas production is 4.482 billion cubic feet per day, the equivalent to 44.82% of the gulf's daily gas production.