NEW YORK – Oil fell 3 percent to $61 a barrel Monday as healthy fuel inventories in top consumer the United States countered plans by OPEC members Nigeria and Venezuela to trim output.
U.S. crude settled down $1.88 at $61.03 a barrel, after dipping as low as $60.90 after BP said it had restarted production at the Lisburne oil field in Alaska over the weekend. London Brent dropped $2.03 to $60.45.
BP shut the 30,000 barrel per day (bpd) field last week after discovering a gas leak in a pipeline. The oil major has been restoring output at its giant Prudhoe Bay oil field in Alaska after severe pipeline corrosion was found in August.
The Lisburne restart added to bearish market sentiment caused by ample U.S. supplies, which have sent prices falling from records over $78 a barrel in July and prompted concern among some OPEC members.
Nigeria and Venezuela last week to pledge to cut supply by about 170,000 barrels per day, less than 1 percent of OPEC's total output, from Oct. 1 as U.S. distillate stocks are at a seven-year high.
"The fundamentals are not very rosy — we've got very high stocks," said Olivier Jakob of Petromatrix. "The market is expecting now to have a bit less production from OPEC, but the question is how much."
Some traders said the planned cutbacks by Nigeria and Venezuela would have little impact on prices unless larger producers in the Organization of the Petroleum Exporting Countries also said they would join the move.
"The only significant thing would be if Saudi Arabia announced they were going to cut output, which they haven't," said Christopher Bellew, a broker at Bache Financial in London. "I really don't think anyone expects much in the way of output cuts at the moment."
OPEC's second-largest producer, Iran, Sunday backed any move by the 11-member group to bolster the market, while stopping short of saying it would trim its own output.
Iran will support any OPEC move to bring oil prices back to an "acceptable and logical" level, Iran's OPEC Governor Hossein Kazempour Ardebili told Iran's official news agency IRNA.
The row over Iran's nuclear program remains a focus for the oil market. Easing concern about the standoff with the West has helped bring U.S. prices down from July's record, but an official said on Monday Tehran will not suspend uranium enrichment, as demanded by the West.
Oil has also been under pressure from brimming U.S. inventories. Stocks of distillates stood at a seven-year high in the week ended Sept. 22, highlighting ample of heating fuel ahead of the Northern Hemisphere winter.
"We've got high stocks and a lot of weather forecasts have been for a mild start to the winter," Bellew said. "People may be disappointed on the demand side in the next two to three months."
Analysts polled by Reuters said U.S. government weekly inventory data to be released on Wednesday will show distillate stocks up another 1.3 million barrels for the week ending Sept. 29, with gasoline stocks up 900,000 barrels. Data for crude stocks was expected to show a 700,000 barrel fall.
Recent weak economic data has also raised doubts about the sustainability of economic growth in the United States in late 2006 and early next year.
Some price support came after militants in OPEC member Nigeria had attacked a Royal Dutch Shell pumping station Monday.