* Warmer Northern Hemisphere weather cuts fuel use outlook
* Oil down $5 this week on assumptions for economy, demand
* CFTC proposals unlikely to affect most market players
(Updates prices)
By Rebekah Kebede
NEW YORK, Jan 15 (Reuters) - Oil prices fell for the fifth
straight day on Friday, settling at $78 per barrel as
expectations for reduced heating demand in the United States, a
stronger dollar and high oil inventories pressured prices.
Mild weather this week has reduced forecasts for fuel
consumption, particularly in the United States, the world's top
oil consumer, after a cold snap in many parts of the Northern
Hemisphere helped push prices above $80 earlier in January.
U.S. crude oil futures for February delivery <CLc1> slid
$1.39 to $78 a barrel, touching a low of $77.70. In London, the
new front-month March contract for Brent crude <LCOc1> slid
$1.46 to $77.11 a barrel.
Oil prices have fallen every day this week, shedding about
$5 from a 15-month intraday high of $83.95 on Monday.
"You're seeing further signs that without buoyant economic
optimism, the oil markets continue to slide lower because of
the poor underlying fundamentals in the market," said Gene
McGillian, analyst at Tradition Energy in Stamford,
Connecticut.
Crude and fuel inventories in the United States rose last
week, despite unusually cold weather, adding to already ample
stockpiles, according to the U.S. Energy Information
Administration.
U.S. demand for distillates, a fuel category that includes
heating oil, was 4 percent below year-earlier levels in the
four weeks ended Jan. 8, according to the report. Temperatures
are now forecast to exceed the seasonal norm, further
suppressing consumption.
The International Energy Agency trimmed its global oil
demand growth forecast on Friday, saying that the recent swathe
of cold weather across major oil consuming countries had done
little to boost fuel demand. []
The Paris-based adviser to 28 industrial economies cut its
prediction for global oil demand growth in 2010 by 20,000
barrels per day to 1.44 million bpd. However, it revised upward
its forecast for total demand in 2010 by 10,000 bpd to 86.3
million bpd.
The U.S. dollar rose on Friday, boosted by data showing a
rise in manufacturing and stable consumer price inflation.
[]
Strength in the U.S. dollar typically pressures oil prices
by discouraging investor interest in dollar-denominated
commodities such as oil. Although the inverse correlation
between the U.S. dollar and oil prices temporarily diminished
earlier this week, the relationship reasserted itself on
Friday.
On Thursday, oil prices edged up briefly after U.S.
regulators announced proposals to cap the size of positions
dealers can hold, aiming to limit speculation.
Analysts said the Commodity Futures Trading 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.
(Additional reporting by Robert Gibbons and Gene Ramos in New
York, Chris Johnson in London; editing by Jim Marshall and Lisa
Shumaker)
