SINGAPORE, (AP) -Oil prices fell below $60 a barrel for the first time in six months Monday amid signs of growing petroleum inventories and after BP PLC said it had received permission to restart the eastern half of Alaska’s Prudhoe Bay oil field.
“Hedge funds and investors have been bailing out because geopolitical tensions have eased and they also realize that inventories are high during this period of seasonally weak demand at the end of summer,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Light, sweet crude for November delivery fell 98 cents to $59.57 a barrel in Asian electronic trading on the New York Mercantile Exchange. That’s the first time since March 13 that intraday trading has fallen below $60 a barrel.
November Brent crude on London’s ICE Futures exchange tumbled $1.04 at $59.37 a barrel.
Oil company BP said Friday it will restart a portion of its Prudhoe Bay eastern operating area, as it conducts an inspection of the crude-oil transit line.
A leak in March at Prudhoe Bay resulted in a spill of up to 267,000 gallons, the largest in the history of oil production on Alaska’s North Slope. A smaller spill last month led to the Aug. 10 shutdown of more than half of Prudhoe Bay’s normal 400,000 barrels-a-day production. Both spills are being blamed on pipeline corrosion.
Oil prices have fallen since the beginning of the month on the lack of developments in the standoff between the United Nations and Iran, who defied the U.N.’s Aug. 31 deadline to stop enriching uranium.
The high prices in July and August were largely fueled by concern over the possibility that Iran could disrupt oil supply if sanctions were imposed or if the monthlong conflict between Lebanon and Israel escalated.
Nigeria, Africa’s largest crude oil producer, was also beset by troubles, including kidnappings of oil workers and a strike by workers’ unions.
Fears of hurricane damage to U.S. Gulf Coast refineries also drove the market higher this summer but the storms so far have blown past the coast.
The Organization of Petroleum Exporting Countries recently reduced its demand forecast for the remainder of the year, citing weakening demand in the U.S., among other factors. Some cartel members have insinuated 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.
The latest U.S. Energy Department data showed crude oil inventories declined by 2.8 million barrels last week to 324.9 million barrels — but that’s still 5 percent 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 percent above year-ago levels.
In other Nymex trading, natural gas futures fell 14.7 cents to $4.480 per 1,000 cubic feet — after its lowest close last week since Sept. 10, 2004. Gasoline futures slid marginally to $1.4700 per gallon, while October heating oil futures declined 0.78 cent to $1.6394 a gallon.