NEW YORK – Oil extended losses for the seventh consecutive session Tuesday, retreating to under $64 a barrel after Iran sounded a softer note on its atomic program and OPEC agreed to keep production steady for now.
U.S. light crude for October delivery settled $1.85 lower at $63.76 a barrel, the lowest level since March 22, and the longest losing streak in nearly three years. London Brent crude fell $1.56 to $62.99.
"There is potential that this could go a long way, since pure supply and demand would dictate a price in the low $50s. But the geopolitical element remains," said Mike Fitzpatrick, vice president at Fimat USA.
Oil has fallen 20 percent in two months, raising questions within the Organization of the Petroleum Exporting Countries about whether to make its first formal output cut in 2-1/2 years.
Many analysts say the extent of the decline depends on OPEC deciding what price it is ready to defend.
"Fundamentally, there's more downside to go, probably to the point where OPEC decides to cut supply," said Mike Coleman, a partner with Singapore-based hedge fund Aisling Analytics.
Iran's oil minister said he wanted to see OPEC's basket of crudes holding above $60 a barrel, about $64 for U.S. crude, while other officials have in the past mooted a $50-$60 range.
OPEC, which has avoided naming a new target price, decided Monday to maintain production limits at 28 million barrels per day (bpd), but said it could meet again before the end of the year to review the situation.
"It is the only good decision they could have taken because prices are still very high," International Energy Agency head Claude Mandil told Reuters.
Saudi Oil Minister Ali al-Naimi, OPEC's most influential voice, said oil demand would remain healthy next year, but OPEC's own economists now say there will be less need for crude from the producer group, which pumps a third of the world's oil.
Geopolitical risk in Iran, the world's fourth-largest oil exporter, appeared to be easing.
U.S. Secretary of State Condoleezza Rice Monday held out the possibility of the United States joining talks with Iran if it temporarily suspends its nuclear program. An EU diplomat said Tehran might be willing to do so.
Iranian negotiator Ali Larijani offered a two-month freeze on uranium enrichment during weekend talks, the diplomat said. Rice's comments suggested Washington was looking for a way to begin negotiations as long as Tehran halted its work first.