Oil falls as cold eases grip

NEW YORK -- Crude prices fell Tuesday as a global cold spell eased its grip, weakening demand for crude that had hit a 15-month high.

By midmorning, benchmark crude for February delivery fell $1.02 to $81.50 a barrel on the New York Mercantile Exchange. On Monday, a weakening U.S. dollar helped push oil to nearly $84 a barrel before falling 23 cents to close at $82.52.

Crude prices have jumped from $69 a barrel a month ago as the coldest weather in years, especially in the U.S. Northeast, boosted demand for products such as heating oil. The forecast shows temperatures moderating for the rest of the month, however.

Meanwhile, Chevron, the second-largest U.S. oil company, said it expects its fourth quarter profit to fall largely because of weakness in its refining business.

Demand for fuel remained very week even as oil prices soared. That has led to big losses for refiners because they can't raise their own prices.

Instead, they have shuttered a number of facilities and cut jobs.

Even though demand for gasoline has not bounced back strongly, soaring crude has dragged pump prices about 15 cents per gallon on average since mid-December.

U.S. gas prices climbed 0.4 cents overnight to a national average of $2.751 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. That's about 96 cents more per gallon than last year at this time.

Chevron said late Monday that weakness in its refining business means fourth quarter profit will be lower than the third quarter. The company did provide exact numbers.

While demand for gasoline is slightly higher than last year at this time, the U.S. economy was in a tailspin then. Demand remains far below levels two years ago.

In other Nymex trading in February contracts, heating oil fell 3.5 cents to $2.1446 a gallon and gasoline slipped 2.2 cents to $2.12 a gallon. Natural gas futures rose 7 cents to $5.524 per 1,000 cubic feet.

In London, Brent crude for February delivery fell $1.29 to $79.68 a barrel on the ICE Futures exchange.