Oil Steady Day After Big Slide in Prices

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On Monday, prices dropped 1.9 percent as forecasts about warmer-than-normal U.S. weather countered last week's gains. It was the biggest dollar and percentage drop for the front-month contract since Nov. 16

Tuesday, light sweet crude for January delivery dropped a penny to US$62.20 a barrel in midday Asian electronic trading on the New York Mercantile Exchange.

Monday's price drop in the oil complex was led by heating oil, which dropped after the U.S. National Weather Service predicted above-normal temperatures for most of the continental U.S., the world's biggest energy user, for the rest of December.

Crude oil prices rose US$1.41 a barrel last week, mostly because the Organization of Oil Exporting Countries agreed to cut production by a further 500,000 barrels a day starting February. The decision came on the heels of the cartel's October decision to remove 1.2 million barrels a day of production from the market.

While traders were initially skeptical of OPEC's ability to get members to comply with the October cut, a drop in production from most of the cartel's 11 members has given more weight to the last decision.

Crude had less of a fall than heating oil Monday, continuing to trade between US$60 and US$64 a barrel, a range it has been stuck in since the end of November.

The next planned event traders will focus on is the weekly U.S. inventory data from the Department of Energy, due Wednesday.

Stocks of crude oil and distillate, which include heating oil and diesel, are expected to decline, while gasoline is expected to increase slightly.

In other Nymex trading Tuesday, heating oil futures rose 0.38 cent to US$1.7245 a gallon, while natural gas futures dropped 1.8 cents to US$7.058 per 1,000 cubic feet.