SAN FRANCISCO (MarketWatch) -- Crude futures closed under $62 a barrel Tuesday as a general cloud of uncertainty in the market, concerns over a potential glut in global oil supplies and easing worries about risks to production helped sent the October contract to its lowest level of the year.Comments from the president of the Organization of the Petroleum Exporting Countries dismissing the near-term likelihood of a production cut probably contributed the largest part of the price pressure Tuesday, said Phil Flynn, a senior analyst at Alaron Trading.
Crude for October delivery fell to a low of $61.60 a barrel on the New York Mercantile Exchange before closing at $61.66, down $2.14, or 3.4%. The intraday low surpassed Friday's low of $62.05 to reach the contract's weakest intraday level since late December 2005. The April contract, however, traded below $60 back in late March. October unleaded gasoline was the biggest decliner among the energy futures, losing 7.58 cents, or 4.8%, to end at $1.5038, after reaching a contract low of $1.48. October heating oil declined by 3.41 cents to close at $1.6916 a gallon.
OPEC President Edmund Daukoru said Tuesday that a production delay for BP Plc's Thunder Horse platform in the Gulf of Mexico to 2008 likely postpones any need to for the cartel to cut back on output, Dow Jones Newswires reported. "This [BP announcement] most certainly does remove the prospect of OPEC cutting production [near term]," Daukoru told Dow Jones.
"This is the comment that really broke the market," said Flynn. The market had previously thought that OPEC may be having some "pumper's remorse," producing at near capacity despite steep declines in oil prices in recent weeks, said Flynn.
Daukoru's statement, however, contrasted with comments from OPEC's acting Secretary General Mohammed Barkindo, who told Dow Jones the oil cartel is concerned about excess supply in the second half of the year.
Separately, AFP reported that Barkindo said OPEC could hold an emergency meeting ahead of its December summit if needed. He declined to specify a price that would trigger a cut in the cartel's production quotas.