Crude oil prices fall below $59 a barrel

NEW YORK — Crude oil prices opened the new year by plunging 4.5 percent on Wednesday, as persistent mild weather in the United States led traders to bet on lagging demand for heating fuels.

Light, sweet crude for February delivery on the New York Mercantile Exchange fell $2.73 from Friday's settlement price to a six-week low of $58.32 a barrel. It was the biggest one-day drop since Aug. 17, 2005, when crude fell $2.83 to settle at $63.25 a barrel.

The Nymex trading floor had been closed Monday for New Year's Day and again on Tuesday for memorial services for former U.S. President Gerald Ford.

Temperatures in New York City were in the 50s on Wednesday, and are expected to surpass 60 degrees over the weekend. Forecasters are saying the warmer-than-normal temperatures in the Northeast United States — the biggest heating oil-consuming region — will continue through January.

"That's going to put heating oil distributors around the country in pretty bad shape," said Mike Fitzpatrick, a vice president for energy risk management at Fimat USA.

With the new drop, prices are starting to near the levels reached late in 2006: "If those are breached, they can fall a long way," Fitzpatrick said.

On Nov. 17, the crude contract had closed at $55.81 a barrel, the lowest settlement since June 15, 2005.

Crude hasn't settled above $64 a barrel since September in what's become an increasingly weather-driven market: Oil surged to $70 a barrel for the first time in 2005 as Hurricane Katrina ravaged the Gulf Coast, broke above $78 a barrel in July 2006 on fears of another bad storm season, and then sank to $60 a barrel when those expectations weren't met.

The front-month crude contract finished 2006 at $61.05 a barrel — a penny above where it ended 2005.

Last week, the U.S. government reported that total crude-based products supplied over the previous four weeks, which include gasoline, jet fuel, distillates, propane and other fuels, were slightly below where they were a year ago, indicating lower demand.

This year's mild winter has arrived against a backdrop of ample global crude inventories, slowing economic growth in the United States and a production spurt from non-OPEC countries.

The selling in the energy market is also being driven by a cooling off in the commodities boom, said Tim Evans, energy analyst at Citigroup Global Markets.