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Amid mild winter, fuel prices slip

US finds stores of crude, heating oil are above normal

Light sweet crude dropped 22 cents to $56.09 in New York Mercantile trading even though Russia suspended the delivery of pipeline oil to Hungary over a price dispute with Belarus. (Laszlo Beliczay/Associated Press)

NEW YORK -- Oil prices declined yesterday, resuming last week's plunge as heating oil supplies go unused due to mild weather in the Northeast.

Prices had briefly rebounded in earlier trading on reports that OPEC oil ministers are considering another cut, and worries that a dispute between Russia and Belarus could result in energy shortages in parts of Europe.

But the rally failed to take hold, and prices began retracing their weather-driven drop. Although forecasters say US temperatures should return to normal over the next couple weeks, it won't be enough to make up for the recent historically warm weather. US supplies of crude and heating oil are above normal for this time of year, according to last week's data from the US Energy Department.

"If you were walking around anywhere in the Northeast this weekend, people were in shorts -- it was like a summer day. Obviously, that's been the story: the winter that was not," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York. "There are some reports of a little colder weather in the forecast, but I don't think that's much of an issue. We've gone this far without anything, so there are no worries about supply."

Light, sweet crude for February delivery dropped 22 cents to settle at $56.09 a barrel on the New York Mercantile Exchange, in a volatile session that saw prices as high as $57.72 and as low as $55.10.

The contract had declined nearly 8 percent last week, the biggest one-week drop since April 2005. Prices are still above Thursday's year-and-a-half low of $55.59, the lowest settlement since June 15, 2005.

Brent crude for February fell 4 cents to settle at $55.60 a barrel on the ICE Futures exchange, after falling as low as $54.41.

Heating oil futures decreased 0.87 cents to settle at $1.5571 a gallon; natural gas prices rose 19.4 cents to settle at $6.378 per 1,000 cubic feet; and gasoline futures fell 2.46 cents to settle at $1.4685.

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