VIENNA, Austria – Crude oil fell slightly Monday as traders weighed the approach of the Northern Hemisphere cold season against the drag of continued low demand.
Diminishing fuel demand has eased concerns about inadequate oil supplies following hurricanes Katrina (search) and Rita — a development reflected by prices last week that hit lows not seen since August. Still, the approaching winter in the Northern Hemisphere typically pushes prices higher.
After rising for much of the electronic session, light, sweet crude for November delivery fell 4 cents to settle at $61.80 a barrel on the New York Mercantile Exchange (search) late Monday.
Heating oil rose $1.17 to $1.9718 a gallon and unleaded gasoline fell 2.42 cents to $1.805 a gallon.
Analysts said fuel demand would likely slip in the short term, perhaps into November, when demand for heating fuel in the Northern Hemisphere comes into full force.
Vienna's PVM Oil Associates noted that 14 percent of total U.S. capacity remained shut following the hurricanes. That — and imports of refined products into the United States that reached "an all-time high of 4.5 million barrels a day" in the last week of September — contributed to the relative lack of demand, it said.
Fuel consumption in the past month fell by nearly 3 percent compared with last year, the Energy Department (search) said last week. Experts said demand was falling due to high gas prices and an economic slowdown in parts of the United States affected by the hurricanes, such as the Gulf Coast states.
Traders also said the release of emergency reserves to replace shortages caused by hurricanes in the Gulf of Mexico oil-producing region eased short-term supply concerns and lent relief to oil prices.
Some traders say Nymex crude could possibly drop to $60 a barrel in the near future, but heating oil and gasoline futures are likely to stay near current levels due to continued concerns over their physical stockpiles.
Analysts also said the U.S. government is unlikely to tap heating oil stocks in October and November on concerns that supply may tighten and demand may strengthen later in the winter season, when it would be critical to have increased supplies. Moreover, government-held heating oil stocks are inadequate, they add, with enough to meet only 10 days of Northeast demand.
Crude is off its recent high of $70.85, reached briefly on Aug. 30 after Hurricane Katrina struck the Gulf Coast. That level was still about $20 below the all-time highs reached in the early 1980s, when adjusting for inflation.