LONDON – Oil tumbled more than $2 Tuesday to below $59 a barrel, sinking to the lowest level since February and prompting OPEC's president to call on the exporter group to deepen supply cuts.
The drop extended a nearly 7 percent slide over two days, pressured by ample fuel stockpiles in top consumer the United States and no evidence of other OPEC members joining Nigeria and Venezuela in cutting output.
"We believe that the market is slightly oversupplied," OPEC President Edmund Daukoru, who is also Nigeria's top oil official, told Reuters. "(Today's drop in the oil price) vindicates what Nigeria is doing and I hope other members will act in the same way."
U.S. crude settled down $2.35 at $58.68 a barrel, after falling to $58.60, the lowest since Feb. 17. London Brent dropped $2.02 to $58.43.
The decline in U.S. oil prices from a record $78.40 in mid-July helped the Dow Jones industrial average stock index climb to a record high 11,755.35 Tuesday, crossing a threshold set in January 2000.
Oil's slide spilled into other commodities as well. Gold slipped nearly 3 percent as the decline in crude reduced the metal's appeal as a hedge against inflation, dealers said. Copper prices also fell.
Nigeria and Venezuela last week pledged to cut crude supply from Oct. 1 by about 170,000 barrels per day, less than 1 percent of OPEC's total output.
Analysts have said the move will have little impact unless larger OPEC producers such as top world exporter Saudi Arabia decide to follow. The group pumps more than a third of the world's oil.
"The Nigerian and Venezuelan announcements are significant, but they don't remove a lot of oil from the market," said Mike Wittner, analyst at Calyon investment bank. "Saudi Arabia has been conspicuous by its silence."
OPEC's second largest producer Iran Sunday backed any move by the 11-member group to bolster the market, but stopped short of saying it would trim output.
NO "MAJOR" HURRICANES
Brimming inventories of fuel ahead of the winter heating season have underpinned the steep decline in oil prices, adding to downward pressure from signs of slower economic growth in the world's largest economy.
Analysts said they believe U.S. stocks of distillates, already at a seven-year high, rose 1.3 million barrels in the week to Sept. 29. The U.S. government will release its inventory report for last week on Wednesday.
"Given comfortable middle distillate stocks, it's hard to see a real supply worry in the winter," Wittner said.
The government report is also expected to show gasoline stocks rose by 900,000 barrels and crude inventories fell by 700,000 barrels.
Prices have also eased due to a lack of hurricanes in the Gulf of Mexico, home to about a quarter of U.S. oil output. Last year, oil jumped to a then-record after Hurricane Katrina disrupted supply.
A noted hurricane forecaster, William Gray's forecast team at Colorado State University, Tuesday predicted the Atlantic hurricane season will see just two more tropical storms and no more "major" hurricanes.