Oil Gives Back Some Of Last Week's Gain
Oil broke below $63 a barrel as producer group OPEC pointed to signs of a weaker market next year and mild weather in the United States limited heating needs.
Militant action in Nigeria and delays to crude imports into the United States stemmed losses.
OPEC on Monday said that the fundamentals of the world oil market show signs of weakening in 2007 as economic growth slows and supply from non-OPEC countries rises faster than global demand.
"Risks for oil demand appear to be more weighed to the downside, given the dangers to global economic growth emanating from a visibly weakening U.S. economy," OPEC said in its monthly report.
OPEC's economists expect producers from outside the group to produce 1.8 million barrels per day (bpd) more crude in 2007. If achieved, that would be the fastest non-OPEC growth for two decades and would cut demand for OPEC oil.
Mild weather continues to crimp heating fuel demand in the United States. Temperatures in the U.S. Northeast were expected to remain above average for at least the next five days, according to private forecaster DTN Meteorlogix.
With demand limited, crude inventories remain relatively high for the time of year.
"I think the market is focused on inventories at the moment," said David Dugdale at MFC Global Investment Management.
"And the overall picture is one of fairly comfortable inventories and strong non-OPEC production coming on stream. And against this background we have softening demand, so the market is justified in coming in."
OPEC last week decided to make a second output cut of 500,000 barrels per day, to start from February, to prevent stockpiles rising again after the northern hemisphere winter.
A Reuters survey shows OPEC only met about two-thirds of its earlier November cutback of 1.2 million bpd, so some analysts question whether fresh limits will be effective in supporting prices that have slid about 20 percent from a record over $78 in July.
Tankers struggled for the fourth consecutive day on Sunday to deliver oil supplies to refineries in Houston and Texas City, which between them account for nearly 12% of U.S. refining capacity.
The refineries also supply crude oil to pipeline systems for refineries in other parts of the country.
Fog affected imports to other refining centers along the U.S. Gulf of Mexico coast.
Some refiners have warned that they may need to slow fuel production due to the delays, but none so far have announced output reductions.
In Nigeria, explosions hit Agip and Shell compounds on Monday. There was no immediate impact on oil output from the world's eighth largest exporter.
Nigerian crude supplies, already down by about a fifth because of militant attacks, have been further trimmed by gunmen who seized an oil platform operated by Royal Dutch Shell in the Niger Delta, shutting its 12,000 bpd oil output, the company said on Saturday.