Oil prices fell to about $60 a barrel Wednesday after OPEC's president said the group will keep output intact and the U.S. Department of Energy reported a sharp rise in crude stocks last week.

Edmund Daukoru, Nigeria's oil minister and president of the Organization of Petroleum Exporting Countries, said output would remain unchanged but that the cartel would monitor it closely between now and its next meeting in Venezuela on June 1.

Meanwhile Wednesday, the U.S. Department of Energy's Energy Information Administration said U.S. crude stocks rose by 6.8 million barrels in the week ending March 3 to 335.1 million barrels — the highest level since 1999.

The increase was attributed to a rise in imports and a fall in refinery use, due to seasonal maintenance, which created a back-up.

"It was an extremely large build in crude stocks — it was way above any expectations," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York.

Light, sweet crude for April delivery fell $1.56 to settle at $60.02 a barrel on the New York Mercantile Exchange, after hitting a low of $59.25 earlier in the day. Wednesday's settlement price was the lowest since Feb. 17, when crude settled at $59.88 a barrel.

The contract has fallen more than $3 this week since Friday's settlement price of $63.67.

In Wednesday's report, the EIA also said gasoline inventories fell 1.1 million barrels to 224.8 million barrels and distillate fuel inventories — which include heating oil and diesel — fell 2.7 million barrels to 131.4 million barrels. Both remain above the upper end of the average range for this time of year, the EIA said, but gasoline stocks are now 0.5 percent below year-ago levels and gasoline demand is 2.5 percent higher.

Gasoline rose 1.68 cents to settle at $1.6502 a gallon on Nymex, after falling as low as $1.5971 a gallon earlier in the day.

Gasoline has been especially volatile recently, after many states have banned the gasoline additive MTBE (methyl tertiary-butyl ether), a groundwater pollutant.

The prospect of phasing out MTBE from the Nymex gasoline contract is tough for the average speculator, Flynn said, because "they're caught up in something they have no control over." Traders expect gasoline prices to rise in the coming months as the summer driving season gears up, but "they worry about whether the contract they're trading will be used in the spring and summer," he said.

Heating oil lost 2.81 cents to settle at $1.6941 a gallon. Natural gas fell 3 cents to settle at $6.648 per 1,000 cubic feet.

Still, markets worry about Iran's nuclear ambitions, and Iran made a statement to the International Atomic Energy Agency earlier Wednesday in which it threatened the United States with "harm and pain."

Iran's minister of petroleum, Sayed Kazem Vaziri Hamaneh, insisted that the Islamic republic would not cut back on or halt its oil exports.

Kuwait's oil minister Sheik Ahmed Fahd Al Ahmed Al Sabah — who believes geopolitical tensions are adding $5 to $8 to each barrel — said he thinks prices will drop below $60 a barrel by the end of June, but are likely to rebound to the $60 range in the fourth quarter.

Markets were also keeping an eye on the situation in Nigeria, the world's 11th-largest oil producer, where recent attacks have reduced the country's production by 455,000 barrels a day, about 20 percent of its output.

It's unclear if the recent bearish sentiment in energy markets will last, but Bentz said he doubts crude-oil prices will break below $55. "Long-term, we're still in a big uptrend as far as I'm concerned," he said.

Market bears are arguing that inventories are high, demand isn't as strong as they predicted, and OPEC is still pumping at record levels. Market bulls, however, say that because of the United States' warm winter and high prices after Hurricane Katrina, demand has appeared low and its potential to surge has been underestimated, Flynn said.

Also, he added, just because OPEC didn't decide to cut production this week doesn't mean they won't do it later if prices tumble. "Oil ministers are going to have pumper's remorse if they see oil prices go below $60 a barrel," he said.