Cold snap not enough to stop halt in sliding energy prices as supplies still remain abundant

Energy prices continue slide despite weather

Not even another winter blast for much of the country could stop energy prices from sliding again on Tuesday.

Crude, natural gas and heating oil prices fell even as below-average temperatures were forecast for much of the eastern half of the country through at least the end of the week. Natural gas prices were off by nearly 4 percent.

Cold and snow from before Christmas into the first part of January helped drive oil prices to a 15-month high earlier this month as homeowners from Chicago to Florida cranked up their thermostats .

But even though huge stockpiles of natural gas and heating oil are being whittled down this winter, supplies are ample.

The recession has crushed demand for electricity and natural gas by companies that make cars, steel and appliances. Many utilities have reported industrial consumption was off by as much as 15 percent to 20 percent last year.

Industrial customers use nearly 30 percent of the gas and electricity produced in the U.S. Declining consumption by industrial customers was a key reason why electricity use overall has fallen two straight years for the first time since 1949.

Some longer term forecasts into February show temperatures moderating, which also hurts demand for gas.

Colder temperatures in the near term are “expected to increase demand for heating fuels and electricity generation,” Peter Beutel of Cameron Hanover said in his report Tuesday. “As we move forward, the bigger questions with the colder weather are: how cold and for how long?”

Oil analyst and trader Stephen Schork said every time natural gas approaches $6 per 1,000 cubic feet, producers drill more wells.

Markets on Tuesday also were concerned that China’s moves to control bank lending would slow the economy of what has become the world’s second largest oil consumer.

Gasoline prices continue to moderate after the big run-up this month pushed prices to a 15-month high of $2.7543 per gallon.

Retail prices fell 0.9 cent overnight to a nationwide average of $2.70 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Prices fell 4 cents in the past week, but are still 10 cents above levels of a month ago and 85.8 cents above year-ago levels.

Benchmark crude for March delivery fell 55 cents to settle at $74.71 a barrel on the New York Mercantile Exchange. Earlier in the session, it dropped as low as $74.14.

In other Nymex trading in February contracts, heating oil lost 1.5 cents to settle at $1.9508 a gallon, while gasoline dropped 3.34 cents to settle at $1.9674 a gallon. February natural gas futures fell 23.7 cents to settle at $5.485 per 1,000 cubic feet.

In London, Brent crude for March delivery gave up 40 cents to settle at $73.29 a barrel on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

(This version CORRECTS gasoline settlement price.)