NEW YORK – Oil fell to fresh 2006 lows below $58 Wednesday as OPEC haggled over details of an output cut and the West's energy watchdog cut its demand growth forecasts.
U.S. crude settled down 93 cents at $57.59 a barrel after touching a $57.48 during intraday trading, the lowest level since December 2005. London Brent crude was down 69 cents at $58.65.
OPEC ministers are united on the need to remove a million barrels from oil supplies to prop up falling prices, but divided on how to do so. News of a voluntary supply cut emerged from Nigeria nearly two weeks ago.
"OPEC can catch the price, but what we're seeing is evidence that there is a lot of divergence in opinion within OPEC about what to do and how to do it," said Bill O'Grady, analyst at A.G. Edwards.
The main stumbling block appears to be whether to make a reduction from the notional 28 million-barrel-per-day (bpd) production ceiling for the 10 OPEC members with output limits, or from the group's actual supply of nearly 27.5 million bpd in September.
Qatar's oil minister, Abdullah bin Hamad al-Attiyah, told reporters he expected the cut to come from actual output. He said a statement could be issued within two or three days or the group could meet sometime between Oct. 16 and 18.
"There is consensus for the 1 million cut, there is no objection," he said. "The (OPEC) president should now decide whether there should be a statement or a meeting somewhere."
The price of oil has fallen nearly $20 from July's peak of $78.40.
The International Energy Agency (IEA) trimmed its forecast for global oil demand growth next year by 90,000 bpd to 1.45 million bpd on slightly weaker U.S. demand.
The IEA, adviser to 26 industrialized nations, revised its forecast for U.S. demand growth after the International Monetary Fund (IMF) last month cut its forecast for U.S. economic growth in 2007.
Some investors said OPEC's cut may be too little or come too late to offset swelling inventories and slowing demand forecasts.
"The world economy is slowing and that's a fact. Fairly small declines in consumption growth due to a slowing economy have very large impacts on price," said O'Grady.
U.S. data due on Thursday — a day later than usual — is expected to show a 100,000 barrels rise in distillate stocks, a Reuters survey found.
Stocks were already at their highest level since January 1999 the previous week and mild temperatures have stemmed demand for heating fuels.
Crude stocks were expected to rise 800,000 barrels.
U.S. government weather forecasters said on Tuesday they expected El Nino to bring warmer-than-average temperatures across much of the country for the winter season.
Also bearish for prices is that Iraq pumped crude exports through its vulnerable northern pipeline to Turkey on Wednesday for the first time in over a month.
Sabotage attacks have mostly idled the line since the U.S.-led invasion of Iraq in March 2003.