VIENNA, Austria – Crude futures fell more than $1 a barrel Monday amid mild weather in the U.S. Northeast on the first trading day of the new year.
Prices spiked last week after militant attacks in Riyadh, Saudi Arabia, sent jitters through the market on fears the supply chain might be broken in the world's leading crude exporter.
But analysts suggested those strikes were no longer affecting the market despite lingering concerns sparked by a call last month by Al-Qaida terror network leader Usama bin Laden (search) for attacks on oil pipelines in the Middle East.
"The market was panicked but fears essentially evaporated ... since there was no follow-up," said Deborah White, senior economist for energy at SG Securities in Paris.
Another factor sending prices lower, White said, was that production outages in Canada and the North Sea were about to end — a development that in the short term would mean an extra 300,000 barrels a day on the market.
Light sweet crude for February delivery fell $1.41 to settle at $42.12 a barrel on the New York Mercantile Exchange (search).
London's International Petroleum Exchange was closed Monday for a holiday.
February heating oil futures (search) plummeted 6.04 cents to $1.1922 per gallon on Nymex, where February natural gas futures (search) declined by 35.9 cents to $5.79 per 1,000 cubic feet and February gasoline futures (search) slipped less than a penny to $1.1317 per gallon.
Despite falling more than $13 per barrel since hitting record highs in late October, the price of crude remains about 25 percent higher than a year ago.
Distillate levels in the United States — the world's largest energy consumer — are lower than a year ago, and colder weather sparks higher demand for heating fuel. Distillates include heating oil, diesel and jet fuel, all premiums as winter bites in the Northern Hemisphere.
Forecaster Accuweather said on its Web site Monday that cold weather will hit the United States midweek from Canada but will only reach the Upper Midwest.
Elsewhere, saboteurs struck an oil pipeline in Iraq over the weekend, damaging infrastructure crucial for money to rebuild the war-ravaged country. On Friday, interim Prime Minister Ayad Allawi said that attacks by insurgents on Iraq's oil infrastructure had cost the country about $10 billion in the past five months.