Crude prices drop on weather, stronger USD

Crude oil prices were lower Tuesday on a slightly stronger US dollar, which made it more expensive for investors using other currencies to make purchases, and as cold weather in Europe and the United States began to moderate.

Some locations in the US Midwest are forecast to have temperatures above freezing for the first time this year, although long-range forecasts predict that another cold spell could hit next month.

February contracts for West Texas Intermediate crude were $1.71 lower to $81.81 per barrel near the close of trade on the New York Mercantile Exchange, while February Brent crude dropped $1.79 to $79.81 per barrel on the ICE Futures Europe exchange in London.

In afternoon trade in New York, Nymex February gasoline futures fell 4 cents to $2.10 per gallon while February heating oil was down 5 cents to $2.13 per gallon, but March contracts for natural gas added 11 cents to $5.54 per million British thermal units.

The retail price of a gallon of gasoline in the United States was up 0.4 cent overnight to $2.751 per gallon on average nationally.

The US Energy Information Administration said that it expects retail gasoline prices in the US to average $2.84 per gallon in 2010, with a peak above $3 per gallon in the spring or summer, with price gains coming despite continuing weak demand.