Mild weather has been forecast in the United States, the world's biggest heating oil market. Till date this season, winter has been mild in the Northeast, and normal to above-normal temperatures are expected to prevail over the next few days. This weather forecast will limit heating oil demand and has triggered a fall in oil prices. Oil futures in New York trading closed at US$42.12 a barrel.
Mild temperatures will give refiners a chance to increase inventory levels, which stood 12% percent below their year-earlier levels at the end of 2004. Oil prices rose 34% in 2004, aided by a mix of unexpectedly strong growth in demand, and limited spare capacity for refining and production. Oil is down more than US$13.50 from its peak of US$55.67 a barrel in late October.
Last week in Saudi Arabia, suicide bombers tried to storm the interior ministry and a security unit in Riyadh, the capital, reviving worries about supply from the region. In addition, Iraq's stop-and-start oil exports through its northern pipeline to Turkey have been idle for two weeks because of sabotage.