WASHINGTON – Oil prices dropped below $58 a barrel Tuesday, extending a decline of more than $2 a barrel a day earlier as traders responded to mild weather on the East Coast and awaited fresh U.S. data that is expected to show rising inventories of crude.
Traders were also doubtful about OPEC's ability to implement its plan to cut 1.2 million barrels a day of production — and skeptical it would make a significant difference in oil prices.
Data released Tuesday showed consumers' confidence in the economy weakened a bit in October, and that may have further weighed on market sentiment. On Friday, U.S. data showed that the economy grew at the slowest rate in more than three years during the July-to-September period.
"It's too soon to be calling a collapse of OPEC unity, but the prevailing sentiment on demand, GDP, oil supply and the cartel remains very bearish," said Citigroup analyst James Neale.
The most recent report from the federal Energy Information Administration showed commercially available supplies of crude oil in the U.S. stand 5 percent above year ago levels at 332 million barrels. The next report is scheduled to be released Wednesday.
Testu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, said that because "huge amounts of oil are available ... I don't think these (OPEC) cuts will have a huge impact."
"We'll have to watch the U.S. winter," Emori said.
Light sweet crude for December delivery on the New York Mercantile Exchange fell 76 cents to $57.60 a barrel. In London, Brent crude fell 38 cents to $58.30 a barrel on the ICE Futures exchange.
Last week, oil prices surged by $2 a barrel after EIA data showed an unexpected decline in U.S. crude-oil inventories. But some analysts believe the market overreacted to the data by failing to account for the impact of a brief shutdown of the Louisiana Offshore Oil Port, through which 10 percent of all U.S. oil imports flow.
That rethinking helped send oil prices sharply lower on Monday, when Nymex heating oil futures plunged to a 15-month low.
On Tuesday, Nymex heating oil futures dipped less than a penny to $1.594 a gallon, while gasoline futures slipped more than 2 cents to $1.4325 a gallon. Natural gas futures declined by 10 cents to settle at $7.317 per 1,000 cubic feet.