Oil prices climbed yesterday on optimism for economic recovery motivated by President-elect Barack Obama’s announcement of a big public works program that came on Sunday.  Current realities appeared to have dampened that optimism this morning, as crude and heating oil prices both fell slightly at the market’s open.  Today’s economic bad news comes from Japan, the second-largest oil-consuming nation after the United States.  In the third quarter of 2008, Japan’s economy shrank by 1.8%, a larger-than expected margin that will most likely result in falling oil demand.

On the other hand, comments by the Libyan oil minister and the president of OPEC signaled plans for another major production cut at their December 17th meeting.

By an hour into the trading day, positives and negatives appeared to have counterbalanced each other.  After early declines, the price for a barrel of crude was up by 0.7% to $44.02 and the price for a gallon of heating oil was 0.5% above its opening price at 9:51 am eastern time.

HEAT USA Price Experts announced a small decline in retail heating oil prices that cut into Monday morning’s steep increases.  They expect minimal changes in tomorrow’s prices, based on current market movements.

HEAT USA Price Report
Today’s average retail heating oil price per gallon: DOWN $0.02
Morning projection (for Wednesday’s price per gallon): UP $0.01

Not even pirates hijacking oil tankers could rescue falling oil prices today, after news of an official recession in Japan and reports of big demand reductions from China’s biggest oil company drove the price of crude to a 21-month low of $54.95 a barrel.  The price of heating oil dropped less sharply, losing 2% to settle at $1.79 a gallon.

HEAT USA price experts were pleased to see the upward trends of the morning reversed, and expect a drop in tomorrow’s retail prices similar to the decline seen this morning.

HEAT USA Price Report
Evening projection (for Tuesday’s average price per gallon): DOWN $0.04