Forecast for heating costs drops a little

WASHINGTON -- U.S. consumers are expected to pay far more to heat their homes this winter than ever before, but recent energy price declines mean the tab won't be as huge as earlier thought, the government said Tuesday.

The Organization of Petroleum Exporting Countries announced today from its meeting in Vienna that it would cut over-production by more than 500,000 barrels a day. OPEC members often exceed their oil production quotas. Curbing overproduction will tighten world supplies and may push prices up or stem their slide.

OPEC head Chakib Khelil said he expected prices would continue to fall. "There is an oversupply" of oil, he said at a news conference. The strengthening dollar and the decline in global demand would also put pressure on prices, he said.

Tuesday, the price of a barrel of West Texas intermediate crude oil dipped closer to $100, dropping to the lowest in more than five months. In London, Brent crude traded below $100 a barrel for a while.

The average household will spend $1,152 for heating during the October-March period, the Energy Information Administration, the statistical arm of the U.S. Energy Department, said in a monthly report. While that is up 16.8% from last winter, it's $30 less than the EIA predicted last month.

Since then, oil and natural gas prices have fallen considerably. Still, homeowners are expected to pay record-high heating prices.

Oil prices had fallen as investors predicted that OPEC would not cut production. Also pushing prices lower was the expectation that Hurricane Ike would not cause significant damage to production and refining.

The price of a barrel of West Texas intermediate for delivery in October fell $3.08 to $103.26. Prices are down 30% from the peak hit in July but up 33% from a year ago. The EIA analysts said they expect oil prices to increase toward the end of this year — averaging $122 a barrel in December.