Benchmark West Texas Intermediate crude for April delivery dropped 99 cents to close at US$101.83 a barrel on the New York Mercantile Exchange. Natural gas futures fell 35 cents, or 6.4 per cent, to US$5.10 per 1,000 cubic feet after having plunged 11 per cent Monday.
Forecasters predict one of the coldest starts to March in history, but later next week a storm could bring warmer temperatures to states in the US Northeast as well as the mid-Atlantic and Eastern Midwest. That raised the possibility that demand for heating oil and natural gas could wane somewhat, even though March and April are both expected to be colder overall than average.
Also weighing on oil was an expectation for rising U.S. supplies. Data for the week ended Feb. 21 are expected to show an increase of 1.2 million barrels in crude oil supplies, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Some analysts expect oil prices to drop in the spring, when many refineries will be carrying out maintenance work, which is temporarily accompanied by lower oil demand. Jitters over an economic slowdown in China could also weigh on prices as weaker growth would reduce demand for gasoline, diesel and jet fuel.
In other markets, Brent crude, which is used to set prices for international varieties of crude, fell $1.13 to US$109.51 on the ICE Futures exchange in London.
Also on the Nymex, wholesale gasoline fell four cents to US$2.80 a U.S. gallon (3.79 litres), while heating oil rose two cents to US$3.10 a gallon.
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