NEW YORK — Forecasts for warmer weather, a stronger dollar and further signs the U.S. consumer is still hurting sent oil prices lower for the fifth straight day.
Add in that people drive less in the winter months and it's no surprise oil fell ahead of the three-day weekend in the U.S.
Benchmark crude for February delivery slid $1.39 cents to settle at $78 a barrel on the New York Mercantile Exchange. The price was down $4.75 for the week.
Early year optimism has been tempered by "prospects for pretty miserable demand" in January and February, said Tom Kloza of the Oil Price Information Service.
Government data raised more concerns about consumer spending power. The Labor Department reported that inflation-adjusted wages fell 1.6 percent last year, the sharpest drop since 1990. Energy costs shot up 18.2 percent last year, the biggest jump since 1979, led by higher gasoline costs, which rose 53.5 percent.
And even as prospects remain bleak for jobs and income in 2010, energy prices are expected to rise. On Tuesday, the government said gasoline should average $2.84 per gallon (75 cents a liter) this year, up from $2.35 (62 cents a liter) last year.
Kloza noted that seasonal factors hit oil prices as well.
"Folks don't tend to drive that much or spend too much in January and February," he said.
Meanwhile, temperatures are expected to be above average across nearly all regions of the U.S. for the next 10 days, which should slow demand for heating oil.
In addition, a stronger dollar makes it more expensive for holders of foreign currencies to purchase oil, which is priced in U.S. dollars.
In other Nymex trading in February contracts, heating oil fell 3.69 cents to settle at $2.046 a gallon and gasoline slid 2.84 cents to close at $2.0454. Natural gas futures gained 10.3 cents to settle at $5.691 per 1,000 cubic feet.
In London, Brent crude for February delivery fell 71 cents to $77.11 a barrel on the ICE Futures exchange.
U.S. financial markets will be closed Monday, Jan. 18, for Martin Luther King Jr. day. (AP)