Oil prices fell back from the US$60-a-barrel mark Monday as the market looked ahead to a surplus of supply in the second quarter and following a suggestion that OPEC is unlikely to further cut production.
On Friday, prices climbed briefly above the psychological US$60 barrier on unrelenting cold U.S. weather.
But light, sweet crude for March delivery was down 84 cents to US$59.05 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. Brent crude for March dropped US$1.13 to US$57.88 a barrel at London's ICE Futures exchange.
Hasan Qabazard, head of research for the Organization of Petroleum Exporting Countries, on Monday forecast a global surplus of crude supply over demand of some 300,000 barrels a day in the April-June quarter. The International Energy Agency has predicted a 2 percent drop in world oil consumption in the second quarter.
In an interview with The Wall Street Journal in Riyadh this weekend, Saudi oil minister Ali Naimi suggested that the cartel was not looking to make further production cuts.
The world oil market is in "much, much better health and balance," and Saudi Arabia's production is currently 8.5 million-8.6 million barrels a day, about 1 million barrels a day lower than six months ago, he said.
"If you are asking me are we going to take additional cuts or increase supply, I do not know," said Naimi, the oil cartel's de facto leader. "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."
The biggest market driver in recent weeks has been the weather, which has depleted U.S. supplies of distillate fuels, which include heating oil, by the largest amount since December 2005. With temperatures still below normal across the Northeast United States, which consumes 80 percent of the nation's heating oil, traders are bracing for the U.S. government inventory data on Wednesday to show an even bigger decrease, reports AP.
Heating oil was down 3.26 cents to US$1.6925 a gallon on the Nymex, and natural gas fell 40.7 cents to US$7.420 per 1,000 cubic feet.
Natural gas, the more popular form of home heating in the United States, had risen more than 60 percent over the past month on the recent cold weather.