SAN FRANCISCO (MarketWatch) -- Crude-oil futures closed with a more than 3% loss Tuesday after Saudi Arabia's oil minister said major oil producers need not cut production further, disappointing hopes that the Organization of the Petroleum Exporting Countries would intervene to prop up prices.Crude for February delivery closed down $1.78, or 3.4%, at $51.21 a barrel on the New York Mercantile Exchange. The contract struck a 20-month intraday low of $50.55.
| A big chunk of OPEC oil costs less than $10 a barrel to pump and deliver. Another big chunk runs under $20 a barrel. Can't really expect $60 prices to continue. |
OPEC decided on a second output cut at a meeting in December but deferred that cut --another 500,000 barrels a day -- until February. Data suggest, however, that individual OPEC members have been lax in implementing the agreed-on cuts, further weighing on oil prices.
"Certainly the prospect of colder weather and short-covering prompted some buying last Friday," John Kilduff, an analyst at Fimat USA, said in a note to clients. And "al-Naimi's comments that OPEC's current measures are 'working well' and that there is 'no need to panic' are just as certainly working on sellers ... as well."
But "OPEC will probably still come forth with some action or at least some lip service to stem the slide in prices," he said. Meanwhile, the presidents of Venezuela and Iran both called for a coordinated effort by OPEC to reduce the amount of oil on the market.
| Oh that will work well. |