SYDNEY (Reuters) – Oil tumbled more than 1 percent on Monday after Saudi Arabia’s oil minister signaled satisfaction with market conditions and some Asian refiners reported a rise in anticipated Saudi supplies next month.
Ali al-Naimi, oil minister of the world’s biggest exporter, and the cartel’s most powerful voice, told the Wall Street Journal that the market was much healthier than before and that OPEC may not need to change output.
U.S. crude stood 53 cents lower at $59.36 a barrel at 0434 GMT, having fallen as much as 82 cents earlier in the day.
News late on Friday that production should resume soon at Occidental Petroleum Corp’s Elk Hills oil and gas field in California added to the selloff, dealers said.
Prices rallied to a more than one-month high of $60.80 a barrel on Friday as OPEC member Nigeria moved to cut supplies and tensions mounted between the United States and Iran, although ended the day with modest 18-cent gains.
On Monday, however, attention shifted toward OPEC’s likely next move when it meets on March 15. The group has already agreed two output curbs of a total 1.7 million barrels per day (bpd) in order to shore up prices and drain inventories.
“If you are asking me are we (OPEC) going to take additional cuts or increase supply, I do not know,” the Wall Street Journal quoted Naimi as saying in an interview.
“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.”
Naimi’s first direct comments on the condition of the market since prices rebounded to nearly $60 a barrel, from a 20-month low under $50 in mid-January, came as a surprise to some analysts who had been braced for more hawkish sentiment.
“Investors were expecting OPEC to cut output again when they meet in March because of seasonal declines in the second quarter,” said Dariusz Kowalczyk, chief strategist at CFC Seymour Ltd.
“But now that he has suggested that OPEC might not cut production, investors believe the market will be strongly oversupplied again in the second quarter.”
Saudi Arabia’s monthly supply notices to Asian refiners added to that unease, with major refiners in South Korea and Taiwan reporting an increase in March crude shipments.
Industry sources said state oil firm Saudi Aramco would supply them with about 7-8 percent less crude than stipulated under their annual contracts, a shallower cut than the 10-13 percent curbs it handed out for February.
Although the rise in supplies could still be offset by deeper cuts to U.S. or European refiners, who pay less for their crude than their Asian peers, the news unsettled traders.
The move also contrasts with Nigeria’s action on Friday, when traders said they had been notified of a force majeure that would cut seven crude oil cargoes from Nigeria’s February lifting schedule and another 11 cargoes from its March program.
Anxiety over Iranian supplies resurfaced last week as it drew nearer a February 21 deadline to halt uranium enrichment, after which it could face further measures from the United Nations.
Iranian President Mahmoud Ahmadinejad on Sunday pledged to pursue the country’s nuclear program but announced no new atomic work, soothing concerns by some analysts who feared he might use the occasion of the anniversary of the 1979 Islamic Revolution to intensify the war of words between Tehran and the West.
Continued chilly weather in the United States helped stem any losses. Temperatures in the northeastern U.S. were expected to average a maximum of 18 degrees Fahrenheit below normal for the next six to 10 days, forecasters said.