Thursday, December 20, 2007

Oil wavers after report on scarce supplies

Oil prices fluctuated Thursday as traders weighed forecasts for a warmer winter — which could lower demand for heating and crude oil — against data suggesting supplies are falling.

Natural gas futures fell after the government reported that inventories declined less than expected last week.

The National Oceanic and Atmospheric Administration said Thursday that the beginning of winter will be warmer than normal in the eastern two-thirds of the nation, which includes the heating oil-dependent Northeast, Dow Jones Newswires reported.Warmer weather could mean lower demand for heating oil and natural gas.

On the other hand, the government on Wednesday reported that supplies of heating and crude oil fell sharply last week. Heating oil supplies are nearly 30 percent below five-year average levels, said James Cordier, president of Liberty Trading Group in Tampa, Fla.

"We have a struggle with supplies," Cordier said.

Energy futures alternated between gains and losses. Light, sweet crude for February delivery fell 37 cents to $90.87 on the Nymex, while January heating oil fell 0.54 cent to $2.5924 a gallon.

January natural gas futures fell 12.8 cents to $7.051 per 1,000 cubic feet on the Nymex after the government reported that inventories fell last week by 121 billion cubic feet, less than analysts had expected.

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