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Oil sheds more than US$1 amid milder weather in the US

Oil prices fell by more than US$1 a barrel on Friday amid milder weather on both sides of the Atlantic that was expected to dampen demand for home-heating fuels.

Friday's selloff followed a runup of more than US$2 a barrel the day before and analysts said oil would likely trade in a narrow band over the coming weeks, pulled between the diminishing belief that demand was low and the mild weather in Europe and the US.

Light, sweet crude for December delivery fell US$1.20 to settle at US$60.58 on the New York Mercantile Exchange.

December Brent crude futures on London's ICE Futures exchange tumbled US$1.27 to settle at US$59.25 a barrel.

"It's moving up and down," said Kevin Norrish, head of commodities research at Barclays Capital in London. "We've got an erosion of the idea that there has been massive demand destruction while ... at the same time you have got some pretty mild weather on both sides of the Atlantic."

Nymex December heating oil futures fell US$0.0374 to settle at US$1.7962 a gallon. Gasoline futures dropped US$0.0188 to settle at US$1.608 per gallon.

Concerns remain that US output of oil and natural gas remains constrained by hurricane-related damage to platforms and pipelines. In the US Gulf area, three refineries remain shut: BP PLC's 437,000-barrel-per-day plant in Texas City, Texas, ConocoPhillips' 225,000-barrel-per-day plant in Belle Chasse, Louisiana, and Murphy Oil Corp's 125,000-barrel-per-day plant in Meraux, Louisiana.

The US Minerals Management Service said on Friday that 52 percent of daily oil production and 46 percent of natural gas production in the Gulf of Mexico remained off-line.

Still, the warm weather appeared to have more of an influence on Nymex December natural gas futures, which fell more than US$0.31 to US$11.372 per 1,000 cubic feet.

"With mild weather expected and the Shell strike in Europe resolved, there is little to rekindle significant buying interest," said Mike Fitzpatrick at Fimat USA.
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