Oil down after weather report

21 December 2007

Crude oil prices dropped slightly on Thursday after the US National Weather Service forecasted that the north-east of the country will experience higher temperatures than normal during the first three months of 2008.

Demand for heating oil is a key factor in the price of crude during the northern hemisphere winter and the north-east of the US is among the world's biggest markets for the fuel.

The suggestion that heating oil usage in the region could be lower than expected put downward pressure on the price of US crude, which closed down 18 cents at $91.06 (£45.82) a barrel.

In London, Brent crude slipped 60 cents to settle at $90.88 a barrel.

Jonathan Evans, senior analyst for New Wave Energy, told Bloomberg that the weather-related price movement could be a sign of how the market will change in the coming months, particularly if the US economy continues to slow.

"It's the peak heating oil season so the big focus is on the weather. This may be the first step in a downtrend," said Mr Evans.