NEW YORK -- Oil prices neared five-year lows yesterday as demand for heating oil fades and concerns about a supply glut returns to haunt oil markets.
On other commodity markets, metals prices soared as the U.S. dollar tumbled against the yen after a breakdown of trade talks between the United States and Japan.
Above-normal temperatures are forecast for the eastern United States by Friday, ending a cold spell that has sent consumer demand for home heating oil soaring to its highest level ever.
And traders remain skeptical that the Organization of Petroleum Exporting Countries will lower output just as demand is starting to taper off, and inventories are growing.
"It's partly the talk of warmer weather," said Jerry Samuels, managing director with Arb Oil in Los Angeles. "There's some general concerns about oversupply."
Heating oil for March delivery fell 3.16 cents, to settle at 47.82 cents a gallon, while West Texas Intermediate sank 59 cents, to settle at $14.13 a barrel. Unleaded gasoline dropped 1.55 cents, to 41.61 cents a gallon.
Adding to concern about future supplies are reports that Saudi Arabia, the world's largest crude producer, isn't inclined to press for lower production ahead of the OPEC meeting next month, and, in fact, is getting ready to increase its output capacity.
Meanwhile, gold prices jumped, leading other precious metals higher.
The dollar fell to a six-month low against the yen yesterday amid concern the Clinton administration will resume calls for a strong yen now that trade talks with Japan have collapsed.
Gold prices often rise as the dollar falls, in part because a weaker dollar makes gold less expensive for foreign investors to buy. The dollar has fallen 5.2 percent since Friday, when talks were broken off, and yesterday in New York closed at 102.10 yen.
"It's certainly giving us some encouragement here," said George Milling-Stanley, analyst with Lehman Bros. in New York. "People are taking money out of alternative investments and putting it into gold."
Gold for April delivery surged $3.90, to settle at $385.60 an ounce, while March silver gained 9.5 cents, to $5.35 an ounce, on the Commodity Exchange.
On the New York Mercantile Exchange, April platinum leapt $4.70, to $397.70 an ounce.