Oil prices dropped 4% to below $59 this evening as mild weather in the US Northeast cut fuel demand in the world's biggest heating oil market.
US crude fell $2.54 to $58.51 a barrel this evening, and London Brent fell $2.35 to $58.09.
U.S. oil on Friday, the last trading day of 2006, settled at $61.05, only 1 cent higher than at the end of 2005 and well below the record high of $78.40 hit in mid-July last year.
Prices have been dragged down since late December by unseasonably warm weather in the United States, especially in the giant Northeast heating oil market.
Lower than normal heating oil demand is helping to offset any impact from supply cuts being implemented by the Organisation of the Petroleum Exporting Countries.
The group has said it will reduce output by a further 500,000 barrels per day from 1 February, adding to a 1.2 million bpd cut from 1 November.
