Oil market weathers ongoing price plunge

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1:40 p.m.

Oil prices dropped below $58 a barrel today, extending a decline of more than $2 a barrel a day earlier as traders responded to mild weather on the East Coast and awaited fresh U.S. data that is expected to show rising inventories of crude.

The expiration of November futures contracts for gasoline and heating oil helped drag prices lower, brokers said, and the market also remains skeptical about the ability of the Organization of the Petroleum Exporting Countries to implement its plan to cut 1.2 million barrels a day of production.

Prudential Financial broker Aaron Kildow said prices for oil and refined products could continue to drift lower amid mild autumn temperatures. "This is mostly a weather-related market right now," Mr. Kildow said, adding that the U.S. is awash in fuel heading into winter.

The most recent report from the federal Energy Information Administration showed commercially available supplies of crude oil in the U.S. stand 5 percent above year-ago levels at 332 million barrels, while inventories of distillate, which include heating oil, were 14 percent above year-ago levels at 144 million barrels. The next report is scheduled to be released tomorrow.

Also weighing on the market was data released today that showed consumers' confidence in the economy weakened a bit in October. On Friday, U.S. data showed that the economy grew at the slowest rate in more than three years during the July-to-September period.

Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, said that because "huge amounts of oil are available. ... I don't think these [OPEC] cuts will have a huge impact."

"We'll have to watch the U.S. winter," Mr. Emori said.

Light sweet crude for December delivery on the New York Mercantile Exchange fell 91 cents to $57.450 a barrel. In London, Brent crude fell 38 cents to $58.30 a barrel on the ICE Futures exchange.

Nymex heating oil futures dipped less than a penny today to $1.594 a gallon, while gasoline futures slipped more than 2 cents to $1.4325 a gallon. Natural gas futures declined by 10 cents to settle at $7.317 per 1,000 cubic feet.

Prudential Financial's Mr. Kildow said he expects to see prices begin leveling off as winter approaches. "I would expect the market to find a bottom down here, just based on the time of year," he said.