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.
Although natural gas inventories are expected to drop by 65 billion cubic feet last week, the decline is lower than the five-year average of 127 billion cubic feet. The U.S. Energy Department reports natural gas and petroleum supply figures one day late on Thursday because the federal government was closed on Monday in observance of the Christmas holiday.
Crude inventories were expected to drop by 2.5 million barrels last week as refiners ramped up production and finished seasonal maintenance. The closure of three key shipping channels in Louisiana and Texas because of heavy fog last week also contributed to the supply decline. Refining activity likely inched up by 0.3% to 91%, according to a
poll of energy analysts.
Distillates, which include heating oil and jet fuel, likely rose by 500,000 barrels and gasoline by 750,000 barrels. Inventories of gasoline are currently about 3% below last year, and distillates are 1.2% lower.
Low supplies and higher demand bumped up wholesale unleaded gasoline by 1 cent to $1.58 a gallon. Americans can take more road trips when the weather is mild, as it has been throughout much of the country.
Energy shares were up a modest 1.2% on the Amex Oil Index.
rose the most on the index of 13 drilling and refining companies, closing up from 1.9% to 2.7%.
is further examining its practice of awarding stock options to its executives after
The Wall Street Journal
reported the company had backdated some of them for its chief executive officer. Eugene Isenberg received more than 25 million options from the company and earned more than $450 million in the past 19 years, the newspaper said.
The onshore driller had previously reviewed its stock options this year and had not found anything questionable. Shares of Nabors closed up 1.2% at $30.58.