Oil falls below $59 on mild U.S. weather

National Weather Service says demand for heating oil in the world's largest market could be nearly 33% below normal this week.

January 3 2007: 10:55 AM EST |LONDON (Reuters) -- Oil fell below $59 a barrel Wednesday, the lowest level since Nov. 24, as mild weather in the U.S. Northeast undermined demand for fuel in the world's biggest heating oil market.

DTN Meteorologists predicted temperatures in the Northeast would be up to 16 degrees Fahrenheit above normal this week. Other forecasters also saw warmer-than-average temperatures until next week.

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The National Weather Service said Tuesday demand for heating oil in the week ending Jan. 6 would be about 33 percent below normal.

U.S. crude fell $2.14 to $58.91 on the New York Mercantile Exchange, having fallen as low as $58.77 earlier in the session.

U.S. oil on Friday - the last trading day of 2006 - settled at $61.05, 1 cent higher than the final day of trading in 2005. U.S. crude averaged $66.24 last year, well below a record high of $78.40 hit in mid-July.

Oil found some support from Iran's refusal to comply with a U.N. resolution to stop its uranium enrichment program.

President Mahmoud Ahmadinejad said the resolution imposing trade sanctions on Iran was "invalid."

Stocks of oil majors, including BP (Charts), ExxonMobil (Charts), ConocoPhillips (Charts), Chevron (Charts) and Royal Dutch Shell (Charts), stopped mirroring crude prices in mid-September and rebounded as traders bet on rising oil prices and looked for deals in a sector many saw as undervalued.