Updated from 10:47 a.m. EST
Oil prices fell back under $59 per barrel Monday as traders again trained their sights on warm weather forecasts and lower energy demand.
Meteorlogix, a Minneapolis weather forecaster, expects warm temperatures this week to lower heating oil demand in the Northeast,
reported. A drop in consumption would also boost supplies of distillates, which are currently about 11% above last year's levels.
Light sweet crude slipped $1.01 to $58.58 a barrel. Wholesale unleaded gasoline ended down 2 cents at $1.53 a gallon and heating oil lost 3 cents to $1.66 a gallon. Natural gas added 10 cents to $7.89 per million British thermal units.
Oil prices have been trading in a tight band of $57 to $61 a barrel for the past six weeks as traders alternatively focused on domestic supply levels, OPEC's move to trim production this month and forecasts for lower energy demand.
The latest report came out on
Friday when the International Energy Agency released its monthly energy outlook in which it shaved its estimate for the third month in a row. Thanks to lower Chinese consumption, the Paris-based group now expects global demand growth to come in 80,000 barrels less this year than its prior estimate at 84.5 million barrels. The forecast for 2007 remains the same at a growth rate of 1.7%.
The Organization of the Petroleum Exporting Countries agreed to trim daily output by 1.2 million barrels this month to prop up oil prices, but traders and the Energy Department doubt all 11 members will follow the cut. The Energy Department predicts the cartel will only trim production by less than 800,000 barrels per day.
Saudi Arabia, however, has publicly agreed to decrease its pumping, and on Monday, its largest producer said it would again send less oil to its Asian refining customers. Saudi Aramco already reduced output this month.
OPEC ministers will meet again next month to discuss whether they should slash production even deeper. Regardless of their decision, prices will likely increase assuming temperatures drop and demand for heating oil rises. Crude is refined into heating oil and other petroleum products.
Energy shares were dipping with crude prices, with shares of drilling, refining and oil service firms falling as much as 0.4%.
were dipping the most on the Amex Oil Index, down at least 1.5% apiece.
Anadarko agreed to sell one of its deepwater discoveries in the Gulf of Mexico for $1.35 billion to
( REP) and
. The deal, which is expected to close in the fourth quarter, follows on the heels of another Anadarko sale last week;
bought two Anadarko fields and a prospect in the gulf for $901 million.
The sales will help Anadarko pay for its acquisitions of
and Western Gas Resources this summer for $21 billion.
In other M&A news,
cut the cash price it will pay for
by $6, to $77 a share. In announcing the decision, Western cited recent fires at Giant's Yorktown and Ciniza refineries, and the resulting increased costs and modified terms associated with Giant's insurance coverage. Giant shares tumbled 5.6% on the news, while Western's rose 0.3%.
Among oil service firms,
were leading decliners, down from 2% to 5% each.