* Warmer northern hemisphere weather cuts fuel use outlook
* Oil falls $5 this week on assumptions for economy, demand
* CFTC proposals unlikely to affect most market participants
(Updates prices)
By Christopher Johnson
LONDON, Jan 15 (Reuters) - Oil slipped to around $79 per
barrel on Friday and was set for its first weekly drop in more
than a month on disappointing economic data and expectations for
reduced heating demand in the United States.
A cold snap in many parts of the northern hemisphere helped
push prices above $80 in early January but warmer weather this
week has reduced forecasts for fuel consumption, particularly in
the world's biggest oil consumer, the United States.
U.S. crude oil futures for February delivery <CLc1> slid 66
cents to $78.73 a barrel by 1402 GMT.
Oil, which has fallen every day this week, has shed about $5
from a 15-month intraday high of $83.95 on Monday, and touched a
2010 low of $78.37 on Wednesday.
The new front-month March contract for London Brent crude
<LCOc1> slid 87 cents to $77.70.
"The market is responding to rather disappointing figures
from the United States, which suggest oil demand will be weaker
than expected. U.S. oil data this week points to softer
fundamentals that don't justify prices around $80 per barrel,"
said Carsten Fritsch, analyst at Commerzbank.
"Colder weather was used as an argument to buy oil, but it
was only a psychological factor and now that has been removed."
NEGATIVE
Edward Meir, senior commodity analyst at brokers MF Global,
said his team "remains negative on the energy markets".
He forecast "a gradual retreat towards the mid to high $70s
into early next week as the excessive rally generated on account
of colder weather is rolled back".
Crude and fuel inventories in the United States rose last
week despite unusually cold weather. Temperatures are now
forecast to exceed the seasonal norm, suppressing consumption.
U.S. demand for distillates, a fuel category which includes
heating oil, was 4 percent below year-earlier levels in the four
weeks ended Jan. 8, a government report showed on Wednesday.
The International Energy Agency said on Friday that a swathe
of cold weather across major oil consuming countries had done
little to boost fuel demand, slightly trimming its global oil
demand growth forecast. []
The Paris-based adviser to 28 industrialised economies
revised its prediction for global oil demand growth in 2010 by
20,000 barrels per day (bpd) to 1.44 million bpd. It moved up
its forecast for total demand this year by 10,000 bpd to 86.3
million bpd after revising the 2009 figure up.
Oil prices edged up briefly on Thursday after U.S.
regulators announced proposals to cap the size of positions
dealers can hold, aiming to limit speculation. []
The recommendations by the U.S. Commodity Futures Trading
Commission (CFTC) will apply to the four most-traded energy
contracts on the two major exchanges, NYMEX and ICE.
Analysts said the Commission had produced a set of largely
workable proposals that would not inconvenience regular market
users. The CFTC said the measures would affect only the 10
biggest position holders if implemented immediately.
It remains to be seen if the limits are enough to satisfy
Congress members who have clamoured for regulatory action since
oil prices jumped to a record above $147 in July 2008.
(Editing by Sue Thomas)
