Oil Prices Slide to $51 on OPEC Comments

MONEYNEWS | VIENNA, Austria -- Oil prices slumped Tuesday after OPEC powerhouse Saudi Arabia reportedly said there was no need for further production cuts to prop up the market.

The comments, by Saudi Oil Minister Ali Naimi, added to growing sentiment that the Organization of Petroleum Exporting Countries would not call a special meeting any time soon to discuss further production cutbacks to stem a more than 13-percent slide in prices this year.

"There is no need now (for further cuts) on the basis of what market conditions are," Dow Jones Newswires quoted Naimi as saying after arriving in New Delhi for an international conference organized by India's Oil Ministry.

Benchmark light sweet crude plummeted $1.43 to $51.56 in morning trading on the New York Mercantile Exchange, after hitting a new 19-month intraday low of $51.25. The price was being compared with Friday's Nymex settlement as the exchange was closed Monday for the Martin Luther King Jr. holiday.

February Brent crude on London's ICE Futures exchange fell 76 cents to $52.36 on Tuesday on London's ICE futures exchange.

Heating oil futures slid nearly 2 cents to trade at $1.4860 per gallon; gasoline futures fell 4.3 cents to $1.3890; and natural gas futures dropped 2.9 cents to $6.572 per 1,000 cubic feet.

The uncommonly warm winter season in much of the Western hemisphere also pushed prices down.

"Right now, the overhanging picture for crude demand is the mild weather. Natural gas and heating oil prices have fallen a lot and that has (an) impact on crude oil price," said ANZ Global Natural Resources analyst Andrew Harrington in Sydney.

To stem falling oil prices, Venezuela's oil minister, Rafael Ramirez, on Monday called for an extraordinary OPEC meeting to push for another production cut.

Ramirez said there are 700,000 barrels to 1 million barrels of excess daily crude production in the world market. He said that some other OPEC countries back Venezuela's proposal but did not say which ones.

But at OPEC headquarters in Vienna, an official who asked not to be identified because she was not authorized to comment, said such a meeting was unlikely -- at least for this week.

Nigerian Oil Minister Edmund Daukoru told Dow Jones Newswires in India on Tuesday that OPEC members should wait until February before deciding on further cuts in their crude oil output.

"We cannot judge the market right now. We'll have to wait till Feb. 1," Daukoru said.

Still, Vienna's PVM Oil Associates said OPEC could not afford to remain idle if prices fell much further.

"If prices threaten to break the $50-per-barrel level, more specific and immediate action can be expected from the group," it noted.

OPEC in recent months has committed to a total cut in output of 1.7 million barrels per day, including a 500,000 barrel-a-day reduction set to begin Feb. 1. But many market participants doubt the cuts are being fully enforced.

According to Dow Jones Newswires, independent surveys suggest OPEC has cut output by little more than half of its pledged levels, and production remains near 27 million barrels a day, leaving overproduction of about 700,000 barrels a day.

"The OPEC is fighting against falling prices but they're having a tough time," Harrington said.

The energy market has had a hard time maintaining rebounds lately, despite several factors that have given prices a boost in the past such as tensions in the Middle East, growing global energy demand and escalating violence in Nigeria.