VINACHEM

Oil declined for a fifth day in NewYork on concern a leadership change in Italy will disruptefforts to curb Europe’s debt crisis.

Prices fell to a three-week low as Italian Prime MinisterMario Monti said he will resign, while his predecessor, SilvioBerlusconi, announced he will run for the premiership to rollback Monti’s budget tightening. Crude also slid as heating oildropped to a four-month low on warmer-than-average weather asNew York reached a high of 61 degrees Fahrenheit (16 Celsius).

“The situation in Italy is weighing on the whole euro zoneand it should have wide-reaching impacts on the economy and oildemand,” said John Kilduff, a partner at Again Capital LLC, aNew York-based hedge fund that focuses on energy. “We have 60-degree weather today here in New York and there is not a lot ofdemand for heating oil.”

Crude for January delivery slid 37 cents, or 0.4 percent,to $85.56 a barrel on the New York Mercantile Exchange, thelowest settlement since Nov. 15. Prices are down 13 percent thisyear.

Brent for January settlement rose 31 cents, or 0.3 percent,to end at $107.33 a barrel on the London-based ICE Futures Europe exchange.

Italian 10-year bond yields jumped today in their first dayof trading since Monti said on Dec. 8 that he planned to resignafterBerlusconi withdrew support for the government.

EU Leaders

Monti and other EU heads of state and government, whogathered in Oslo to collect the Nobel Peace Prize, are seekingto present a united front as the resurgent Berlusconi hits thecampaign trail with his anti-austerity message.

“Monti’s resignation makes people more nervous aboutEurope’s debt crisis,” said Michael Lynch, president ofStrategic Energy & Economic Research in Winchester, Massachusetts.

Crude followed declines in heating oil. January futures ofthe fuel slid 0.7 percent to $2.8962 a gallon, the lowestsettlement since Aug. 2.

New York’s high of 61 degrees was 16 degrees above theaverage reading, according to AccuWeather Inc. in State College, Pennsylvania.

Commodity Weather Group LLC in Bethesda, Maryland,predicted normal or warmer-than-normal weather in most of thelower-48 states through Dec. 24.

About 26 percent of households in the Northeast depend onheating oil for space heating, according to the EnergyDepartment.

Heating Oil

“We have very warm weather here in the U.S., which is kindof taking a hit to the heating oil market and weighing on oil,”said Stephen Schork, president of the Schork Group Inc. inVillanova, Pennsylvania.

Crude also dropped as investors watched the latestdevelopments in American budget talks. President Barack Obamaand House Speaker John Boehner met one-on-one yesterday at theWhite House, with representatives for the two leaders offeringno details of the negotiations yet issuing identical statementsafterward that “the lines of communication remain open.”

Oil rose as much as 1 percent earlier as China’s net crudeimports climbed to a six-month high in November and GermanOctober exports unexpectedly increased.

China bought 23.25 million metric tons of crude more thanit exported last month, according to figures released on thewebsite of the Beijing-based General Administration of Customstoday. That’s the equivalent of 5.68 million barrels a day, up 3percent from a year earlier and the most since May, datacompiled by Bloomberg show.

Upward Move

“The petroleum markets are attempting to organize a movehigher around Chinese data that showed stronger November importson the start-up of new refinery units, but are meeting withmixed results,” said Tim Evans, an energy analyst at CitiFutures Perspective in New York, in an e-mail. “Themacroeconomic outlook is uncertain, with the U.S. fiscal cliffunresolved.”

The Organization of Petroleum Exporting Countries willprobably leave its production quota unchanged when it meets Dec.12, a Bloomberg survey showed. The group will probably maintainits production quota at 30 million barrels a day of oil,according to a Bloomberg News survey of 18 analysts.

Electronic trading volume on the Nymex was 395,757contracts as of 3:28 p.m. Volume totaled 494,081 contracts onDec. 7, 5.2 percent lower than the three-month average. Openinterest was 1.55 million.