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Oil Declines on Outlook for Milder Weather in U.S. COMMODITIES MARKETPLACE By Bloomberg

Posted on: Friday, 16 December 2005, 12:00 CST

By Mark Shenk

Prices of crude oil and heating oil fell Thursday on speculation that milder weather in the Midwest of the United States would move east by the end of the month, cutting heating-fuel consumption. Warmer-than-normal weather will move through the middle of the United States by Dec. 28, according to the National Oceanic and Atmospheric Administration. "It's all about Mother Nature," said Kyle Cooper, an analyst with Citigroup in Houston. The price of crude oil was also held down by a government report Wednesday showing that stockpiles of crude oil rose 892,000 barrels to 321.2 million last week, leaving supplies 9.3 percent higher than a year earlier.

"The fundamentals for crude oil aren't that good," said Bill O'Grady, an analyst with A.G. Edwards & Sons in St. Louis, Missouri. "I might be able to justify prices in the $57-to-$58 range, but not between $60 and $61 a barrel.'

Crude oil for January delivery fell 86 cents to $59.99 a barrel at 4 p.m. on the New York Mercantile Exchange. Oil reached a record price of $70.85 a barrel on Aug. 30, the day after Hurricane Katrina struck Louisiana and Mississippi. Heating oil for January delivery fell $5.77 to $178.73 a gallon in New York.

The price of gold slid after the Tokyo Commodities Exchange raised trading costs, signaling investor demand may decline. The price of gold has climbed by around 15 percent this year.

"Blame the Japanese for the sell-off," said Billy Flahive, a trader at Island Trading Group. "This correction was long overdue, and that's healthy for the market." Gold futures for February delivery fell $2.90 to $506.60 an ounce on the Comex division of the New York Mercantile Exchange. Hog prices fell to a five-week low in Chicago after pork processors slashed prices to increase sales to supermarkets and restaurants. Hog futures for February delivery fell 1.8 cents to 64.375 cents a pound on the Chicago Mercantile Exchange, the lowest closing price for a most active contract since Nov. 10.

Source: International Herald Tribune

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