Nymex crude oil futures at the NYMEX Exchange when down Monday, traders where speculating on of a large increase in U.S. crude stocks and a reduce output cut by oil producers, the news wires reported.
The expectations are that this week's inventory data from the American Petroleum Institute and the U.S. Department of Energy will show a large increase in crude stocks after last week's surprisingly big decline.
Last week's API data showed a decline of about 12 million barrels in crude stocks, but API and also DOE officials later attributed the slide to bad weather on the U.S. Gulf Coast that prevented tankers from unloading.
As a result, analysts say crude inventories are likely to show this week a substantial corrective increase, reports are due Tuesday and Wednesday.
"The expectation is we are going to see a build to make up for the fog-delayed barrels," said Peter Beutel, an analyst at Cameron Hanover, a trading advisory firm in Connecticut. "That is putting pressure on crude oil." Dow Jones reported.
Nearby April crude fell 60 cents to close at $28.45 a barrel. Trading in March heating oil and gasoline was extremely volatile ahead of expiration Wednesday.
March gasoline traded in a range of 83.25 cents a gallon and 85.30 cents a gallon before closing at 84.20 cents a gallon, down 72 points.
March heating oil was the lone contract in the complex to post a gain after trading in a wide range of between 73.30 cents a gallon and 75.35 cents a gallon.
The contract ended at 75.00 cents a gallon, up 55 points. Analysts and traders said part of Monday's damage was due to new feeling that the OPEC will leave production levels unchanged when it meets March 16.
As, the wires reported that OPEC Secretary General Ali Rodriguez reiterated over the weekend that the group won't cut output next month if prices stay near current levels.
"If we see the price (of the OPEC basket) continue to hover around $25.00 a barrel...if the average of the basket is maintained, there wouldn't be any additional cuts at the March meeting," OPEC Secretary-General Ali Rodriguez told Venezuela's local daily El Nacional Saturday.
The value of OPEC's reference basket of seven crude oils averaged $24.64/bbl Friday, up from $24.48/bbl Thursday.
In recent weeks, press reports said OPEC sources had suggested that the group was tilting toward an output cut next month to head off a price decline during the second quarter, when oil demand is expected to drop.
But Rodriguez's statement along with similar comments by OPEC President Chakib Khelil last week turn around the cut expectation, analysts said.
OPEC last month agreed to cut output by 1.5 million barrels a day due to a expected fall in oil demand during the second quarter.
But some analysts say oil demand could fall even more sharply this year as a slowing U.S. economy forces consumers and corporations to cut back on spending.
That worry has been the main driving force behind the recent weakness in oil prices, analysts said.
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