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Jan. 12 (Bloomberg) -- Crude oil dropped a second day in New York on forecasts cold weather in the eastern U.S. will abate this week, curbing heating fuel demand in the world’s biggest energy user.
Oil declined after a prediction that above-normal temperatures will begin moving into eastern cities including New York and Boston later this week, according to MDA Federal Inc.’s EarthSat Energy Weather. The Northeast accounts for about four- fifths of the country’s heating oil consumption.
“With temperatures expected to recover from the middle of this week, buying interest will be reduced,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “There are enough stocks out there and no supply fear at the moment.”
Crude oil for February delivery fell as much as 93 cents, or 1.1 percent, to $81.59 a barrel in electronic trading on the New York Mercantile Exchange. That’s the steepest intraday drop since Dec. 21. The contract was at $81.91 a barrel at 11:32 a.m. Singapore time.
Futures yesterday reached $83.95 a barrel, the highest since Oct. 14, 2008, on a report China’s crude oil imports hit a record last year. The country is the world’s second-largest energy consumer.
The dollar advanced against all 16 of its major counterparts, damping the investment appeal of commodities. The U.S. currency climbed as much as 0.4 percent to $1.4454 per euro, from $1.4513 yesterday in New York.
Average Temperature
The average temperature in New York was 27 degrees Fahrenheit (minus 3 Celsius) during the first 10 days of 2010, according to the National Weather Service. That’s six degrees below normal. Oil rose 4.3 percent over that period.
“The cold snap in the U.S. seems to be breaking,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “For distillates and heating oil that could see some demand coming off in the coming weeks and months.”
U.S. distillate fuel stockpiles probably declined a fifth week as demand increased during the cold snap. Supplies including heating oil and diesel dropped 1 million barrels last week, based on the median estimate from 11 analysts surveyed by Bloomberg News. Nine respondents forecast a draw-down and two estimated a gain.
Distillate inventories fell to 159 million barrels in the week ended Jan. 1, 16.1 percent above the five-year average level, according to the Energy Department.
Oil Stockpiles
U.S. crude oil and gasoline inventories are expected to have increased a second week last week, the Bloomberg survey showed. The Energy Department will release its Weekly Petroleum Status Report at 10:30 a.m. tomorrow in Washington.
Heating oil for February delivery pulled back a second day in New York, falling as much as 2.09 cents, or 1 percent, to $2.1592 a gallon.
Brent crude oil for February settlement fell as much as 89 cents, or 1.1 percent, to $80.08 a barrel on the London-based ICE Futures Europe exchange. The contract, declining for a fourth day, was at $80.40 a barrel at 11:32 a.m. Singapore time.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
Last Updated: January 11, 2010 22:35 EST