Oil dropped nearly 3.5% to below $58 Monday as OPEC members including Saudi Arabia signaled the group would probably keep output stable when it meets in March and as U.S. winter supply concerns eased.
U.S. crude settled down $2.08 to $57.81 a barrel, after dipping as low as $57.38 in earlier activity. London Brent crude slid $2.41 to $56.60.
The losses came after Ali Al-Naimi, oil minister for OPEC powerhouse Saudi Arabia, said the cartel would probably keep production levels steady at its next meeting on March 15. "If you are asking me are we (OPEC) going to take additional cuts or increase supply, I do not know," Naimi said in an interview with the Wall Street Journal.
"But, most probably, if the trend is like what it is like today, with the market getting in much, much better health and balance, there may not be any reason to change," he said.
The remarks were consistent with comments Naimi made on Jan. 16, when oil was nearer $51, and Qatari Oil Minister Abdullah al-Attiyah backed his comments. "I agree 100 percent," he told reporters. "I am confident OPEC will not change (production) ... Below $50 is not good for producers and higher than $60 is not good for consumers."
The group has already cut 1.7 million barrels per day -- 6% of OPEC supplies -- in two stages on Nov. 1 and Feb. 1, after oil prices tumbled from record highs over $78 a barrel in July.
OPEC ministers from Kuwait, Algeria and Nigeria have lined up in recent days to say that, barring unforeseen developments, there was no need for further OPEC supply reductions.
Heating Oil Off
The curbs and recent onset of cold weather in top consumer the U.S. helped lift oil back towards $60 from a 20-month low under $50 in mid-January. But some investors now say U.S. winter demand may subside in the coming weeks, causing heating oil futures to fall 4.5% on Monday and weighing on crude prices.
"Heating oil is getting crushed here as, essentially, the market thinking is, the winter is over," Addison Armstrong, an analyst at TFS Energy said.
OPEC's research head Hasan Qabazard told reporters at a London conference he saw potential for a normal 300,000-400,000 barrels per day stockbuild in the second quarter, when demand traditionally tapers off with the end of the Northern Hemisphere winter. "With the market going the way it is, I don't think that we need to cut," he said.
Iran's stand-off with the United Nations over its nuclear program also supported prices. Anxiety over Iranian oil supplies resurfaced last week ahead of a Feb. 21 deadline to halt uranium enrichment, after which it could face further United Nations measures.