Crude oil futures have fallen to below $56 a barrel - their lowest level in over a year.
The price of oil sank more than $2 a barrel yesterday as markets weighed OPEC cutting output.
Vienna-based PVM Oil Associates said today that "high stocks and warmer weather forecasts for the US dragged down all Nymex contracts," with benchmark crude on the New York Mercantile Exchange dropping 4.2 percent to a yearly low of $56.26 a barrel.
These mixed signals help explain why crude futures have settled in a range roughly between $57 and $61 since the beginning of October.
Light sweet crude for December delivery, whose contract expires Friday, was down 75 cents to $55.51 a barrel on the Nymex by midday in Europe. January Brent on London's ICE Futures exchange was down 52 cents to $58.02 a barrel.
But many analysts remain bullish in their outlooks, citing concerns about instability in Nigeria and Iraq, a recent drop in US refinery output and trading patterns that suggest the market is preparing for a late-year upswing.
"Now with OPEC already talking another production cut and the extremely strong demand we should soon pressure the upside of our current trading range," Phil Flynn, an analyst at Alaron Trading Corp., told Dow Jones Newswires. "And to break out we will need just one little bullish story to get the complex rolling."
Heating oil futures fell 1.55 cent to $1.6450 a gallon on the Nymex, while gasoline futures were down a cent to $1.5200 a gallon. Natural gas futures fell 3 cents to $7.725 per 1,000 cubic feet.