Oil prices dropped below $60 a barrel in Asian trading this morning, and analysts attributed the fall to large inventories and receding fears about supply threats.
Light sweet crude for November delivery fell 60 cents to $59.95 a barrel in mid-morning Asian electronic trading on the New York Mercantile Exchange.
Oil prices have dropped 23 per cent since the middle of July, as supply threats from Iran and Nigeria have diminished alongside fears about this year's Atlantic hurricane season. Signs of economic weakness in the United States also have helped push oil prices down.
The possibility of a production cut by Opec prompted some buying last week among bargain hunters who believe oil is fairly priced at around $60 a barrel.
Opec recently reduced its demand forecast for the remainder of the year, and some cartel members have hinted that oil prices below $60 could prompt talk of a production cut.
At its most recent meeting Opec maintained its current output quota of 28 million barrels a day, and some analysts say it will be difficult to convince oil-producing nations to ease up on production at a time of record profit margins.
US Energy Department data showed crude oil inventories declined by 2.8 million barrels last week to 324.9 million barrels - still 5 per cent more than last year and well above the five-year average for this time of year.
Inventories of distillate fuels such as diesel and heating oil grew by 4.1 million barrels last week to 148.7 million barrels, or more than 11 per cent above year-ago levels.
AP