Crude drops below $57 a barrel ahead of inventory data
NEW YORK – Crude-oil futures fell below $57 a barrel Tuesday on forecasts that U.S. oil inventories likely grew in the past week and that high oil prices are dampening global demand.Light, sweet crude for December delivery on the New York Mercantile Exchange fell 71 cents to settle at $56.98 a barrel – the lowest settlement price since June 30, when front-month crude settled at $56.50.December heating oil slipped nearly 5 cents to settle at $1.6809 a gallon Tuesday, while gasoline fell nearly 4 cents to settle at $1.4564 a gallon.Natural gas fell 4.4 cents to settle at $11.563 per million British thermal units.In London, December Brent crude slipped 62 cents to settle at $54.10 a barrel on the ICE Futures exchange.Traders are optimistic about this Wednesday’s U.S. petroleum-inventory report. Commercial crude inventories are expected to rise 1.3 million barrels, according to the average estimates of 10 energy analysts surveyed Monday by Dow Jones Newswires. Distillate stocks, which include heating oil and diesel fuel, are expected to increase by 300,000 barrels, while gasoline stocks are expected to rise 1.35 million barrels, according to the survey.If Wednesday’s report meets those predictions, traders’ supply concerns will likely ease, at least for the short-term, said John Kilduff, analyst at Fimat USA.Also fueling downward pressure on oil prices was last week’s forecast from the International Energy Agency. The IEA lowered its 2005 world demand growth estimate by 70,000 barrels a day, to 1.2 million barrels, and its 2006 demand growth estimate by 90,000 barrels a day, to 1.66 million barrels a day.However, markets remained jittery that cold weather could drain heating oil stocks and that OPEC may make end-of-year production cuts.Forecasters are predicting much lower temperatures – and thus higher demand for heating oil – in the coming week.Also, traders are starting to worry that the Organization of Petroleum Exporting Countries will cut back on oil production as they did last year, said Alaron Trading Corp. analyst Phil Flynn.OPEC had boosted oil production after hurricanes Katrina and Rita struck oil facilities in the Gulf region.”They’re more and more concerned they’ll have an oil glut,” Flynn said. “OPEC is more than happy to rein in overproduction.”Meanwhile at Nymex, copper hit record highs amid talk that a Chinese trader had built a big short position – betting that prices would fall – on the London Metal Exchange, which handles about 90 percent of the world’s global metals futures trading.Traders in London, Beijing, New York and Shanghai told Dow Jones Newswires that trader Liu Qibing sold between 100,000 metric tons (110,000 tons) to 200,000 metric tons (220,000 tons) of copper, much of it due for delivery in December, in hopes that he could buy it back for a profit when prices fell.Liu has dropped from sight in recent weeks, according to Dow Jones Newswires, fueling speculation that China might have to buy large amounts of copper to fullfill the contract. That has pushed the three-month copper price on the London Metals Exchange to a record high of $4,155 a metric ton Tuesday. The contract closed at $4,135 a metric ton, up $9.50 from Monday’s closing price.—Associated Press Writer Gillian Wong in Singapore contributed to this report.