Mild winter drives US oil down 6%

US oil prices have fallen by 6%, driven down by forecasts of a mild winter in the densely populated northeast.

Light crude oil futures fell $2.86 to $41.32 a barrel on the New York Mercantile Exchange (Nymex), and have now lost $4 in five days. Nonetheless, US crude is still 30% more expensive than at the beginning of 2004, boosted by growing demand and bottlenecks at refineries. Traders ignored the possible effects of Asia's tidal waves on global supplies.

Instead, the focus is now on US consumption, which is heavily influenced in the short term by the weather. "With the revised milder temperatures... I'm more inclined to think we'll push lower and test the $40-40.25 range," said John Brady of ABN AMRO. "The market definitely feels to be on the defensive." Statistics released last week showed that stockpiles of oil products in the US had risen, an indication that severe supply disruptions may not arise this winter, barring any serious incident. Oil prices have broken records in 2004, topping $50 a barrel at one point, driven up by a welter of worries about unrest in Iraq and Saudi Arabia, rising demand and supply bottlenecks. London's International Petroleum Exchange remained closed for the Christmas holiday.