NEW YORK -- Oil prices dropped yesterday as traders apparently shrugged off worries about whether production cuts by two key producing nations were harbingers of further restrictions by OPEC members.
On Friday, Venezuela said it would reduce oil output by 50,000 barrels a day to try to stem the recent fall in crude prices. Nigeria on Saturday said it was cutting oil exports by 5 percent, which the state-owned oil company described as a routine seasonal reduction.
Light, sweet crude for November delivery fell $1.88 in electronic trading on the New York Mercantile Exchange. The contract rose 15 cents on Friday to settle at $62.91 a barrel. In London, Brent crude from the North Sea settled at $60.45, down $2.03.
Heating oil futures slipped 5.17 cents to settle at $1.7018 per gallon while gasoline prices fell 4.52 cents to $1.5087 a gallon. Natural gas futures settled at $5.643 per 1,000 cubic feet, up 2.3 cents.
``High inventories are building even in the face of lower runs and macroeconomic figures are also coming out bearish," said Raymond Mazzeo, vice president at Energy Merchant LLC. ``This is a continuation of the most recent weakness that we've seen."
While the 11-member Organization of Petroleum Exporting Countries decided earlier this month to hold to a 28 million-barrel-a-day output quota, many traders say the group would like to rein in production if crude-oil futures drop below $60 a barrel.
``The market seems to have reached a floor in the low 60s due to the widespread feeling among traders that OPEC may be galvanized to control output or cut production if prices are below $60 a barrel," said Victor Shum, an analyst with Purvin & Gertz in Singapore.
The cuts disclosed by Nigerian National Petroleum Corp. take 115,000 barrels of crude oil a day from Nigeria's current OPEC quota of 2.3 million barrels daily.
The reduction was to begin Sunday. Refiners often decrease their output to conduct maintenance during the slow season.
Venezuela, a major oil supplier to the United States and a founding member of OPEC, is already thought to be producing well below its OPEC quota -- around 2.5 million barrels a day instead of the 3.2 million barrels it reports to the cartel.
World oil prices have dropped to six-month lows recently as demand slackens with the end of summer travel in major oil-consuming regions.
Meanwhile, supplies are generally believed to be ample, and experts say the latest production cuts will have little effect on the fundamental supply-demand picture.
``Hawkish comments from members will only increase in frequency the lower the price goes, but in trying to gauge quota policy, the most weight should be attached to comments from Saudi Arabia," BNP Paribas said in a research note.