Asia

Feb. 12 (Bloomberg) -- Crude oil plunged below $58 a barrel in New York after Saudi Arabia told Asian refiners to expect more shipments next month and the nation's oil minister said OPEC has no need to further rein in production.

Saudi Arabia will ship 7 percent less-than-contracted volumes to the refiners in March compared with a cut of as much as 14 percent this month, said officials who received notices and asked not to be identified because of confidentiality agreements. Saudi Arabia's oil minister, Ali al-Naimi, said OPEC may not have to make additional output cuts, the Wall Street Journal reported.

``Reports that Saudi Arabia is supplying more oil to Asia and indications OPEC won't make further cuts started this move to the downside,'' said Michael Fitzpatrick, vice president for energy risk management at Fimat USA in New York. ``The lower it goes the more selling is triggered. Big moves are becoming the norm.''

Crude oil for March delivery fell $2.08, or 3.5 percent, to close at $57.81 a barrel on the New York Mercantile Exchange, the biggest one-day decline since Jan. 11.

Natural gas for March delivery tumbled 60.1 cents, or 7.7 percent, to $7.226 per million British thermal units, the biggest decline since Dec. 26, on forecasts for milder weather in the eastern U.S. next week after snowstorms in the next few days.

Crude oil futures touched $60.80 on Feb. 9, the highest intraday price since Jan. 3. Prices are 6.8 percent lower than a year ago. Daily price swings in crude oil futures are widening. Futures fell or rose more than 1.5 percent on 25 trading days in the past two months compared with 14 days in the same period a year earlier, according to data compiled by Bloomberg.

``The failure to sustain the rally above $60 on Friday was not a good technical sign,'' said Tom Bentz, an oil broker with BNP Paribas Inc. in New York. ``I think we got a little ahead of ourselves and will be in corrective mode for a couple days.''

Last month, Saudi Aramco informed customers in South Korea that supplies would be cut by between 11 percent and 14 percent in February and refiners in Japan would receive between 10 percent and 12 percent below contracted volumes. Saudi Aramco is the world's largest state oil company.

The Organization of Petroleum Exporting Countries' 12 members are scheduled to meet in Vienna on March 15 to decide whether to further trim oil output. OPEC already agreed to remove 1.7 million barrels a day from the market in two phases to stop prices from declining. The second reduction began this month.

``The Saudi announcement precludes any further cutbacks from OPEC,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis. ``It's not unusual for supplies to increase in the second quarter. The increased Saudi production suggests that there may be some inventory rebuilding in the second quarter.''

OPEC expects markets will have a surplus of 300,000 barrels a day during the second quarter as winter demand eases, Hasan Qabazard, the group's head of research told reporters in London today.

Brent crude oil for March settlement declined $2.41, or 4.1 percent, to close at $56.60 a barrel on the London-based ICE Futures exchange. It was the biggest one-day decline since Jan. 4.

Prices also fell on speculation that U.S. heating-oil inventories are sufficient to meet winter demand. Home-heating demand in the Northeast, the region responsible for 80 percent of U.S. heating-oil use, will be 33 percent above normal for the coming week, said Weather Derivatives, a forecaster in Belton, Missouri.

``I think we were a little over enthusiastic about the weather's impact on the oil market last week,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Winter will soon be over as far as refiners are concerned. It won't be that long before we'll see warmer temperatures.''

Mild weather in December and early January helped push New York oil futures to $49.90 a barrel on Jan. 18, the lowest since May 25, 2005. The arrival of colder weather has helped drive prices higher this month.

``Prices were unable to stay above $60 and only a few weeks ago we tested $50,'' said Eugene X. Hodge, a managing director at John Hancock Financial Services Inc. in Boston, who manages a $4.3 billion oil and gas company bond portfolio. ``It looks like we are happy in a $50 to $60 range as long as there isn't a major political development.''

The European Union began enforcing United Nations sanctions on Iran's nuclear program while promising to consider a new offer by the Iranian government for a negotiated settlement. Oil in New York jumped to a record $78.40 a barrel on July 14 partly because of violence in the Middle East and concern that Iran's defiance of UN nuclear inspectors might disrupt the nation's exports.

Heating oil for March delivery plunged 7.97 cents, or 4.6 percent, to close at $1.6454 a gallon in New York, the biggest one-day decline since Oct. 30.

Oil down 3.5 percent as OPEC signals stable output

Matthew Robinson, Reuters found at canada.com

NEW YORK (Reuters) - Oil dropped nearly 3.5 percent to below $58 on 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 January 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 -- six percent of OPEC supplies -- in two stages on November 1 and February 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 United States helped lift oil back toward $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 percent 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 February 21 deadline to halt uranium enrichment, after which it could face further United Nations measures.

(Additional reporting by Fayen Wong in Sydney and Janet McBride in London)

Asia

Oil down 3.5 percent as OPEC signals stable output

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