Oil Prices Tied to Weather Forecasts
WASHINGTON, D.C. --- Just as cold weather can drive crude oil prices higher during the winter, expectations of warmer weather can help lower prices --- and that's what happened over the past week, the Energy Department’s Energy Information Administration reported.
Several private forecasters predicted that warmer-than-normal weather for much of the Central Atlantic and New England regions is coming, and crude oil prices lost some of their steam. The near-month futures price on the NYMEX dropped below $58 per barrel on Dec. 20, the EIA said.
Harsh winter weather has recently helped demand for distillate fuel (diesel fuel and heating oil combined) soar well above 2004 levels. Demand is also growing, despite retail prices well above $2 per gallon. But the weather patterns of the remaining winter could have a major impact on where oil prices head from here, the EIA said.