NEW YORK – Oil prices lost more than $1 a barrel Monday on continued concerns over stock market declines and an indication by an OPEC official that the cartel won't cut production at its next meeting.
Light, sweet crude for April delivery tumbled $1.57 to settle at $60.07 a barrel on the New York Mercantile Exchange. Earlier, the contract dropped as low as $59.55 a barrel, dipping below $60 for the first time since Feb. 28.
Brent crude for April also fell $1.54 to settle at $60.54 a barrel on the ICE Futures exchange in London.
"There's a general sort of recoil from risk in the market," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "There are still ongoing ramifications from China's drop last Tuesday. It was a jolt to the global economy."
Last Tuesday, the benchmark Shanghai Composite Index plunged 9 percent, triggering huge losses on Wall Street and other markets. The oil market still closed at a two-month high on Thursday on the news of tightening gasoline supplies, but afterward followed the stock market's downward pull.
On Monday, the Shanghai Composite Index fell 1.6 percent, while the Dow Jones industrials was down 16.99 points to 12,097.11 in afternoon trading.
Comments from an oil official that the Organization of Petroleum Exporting Countries is unlikely to call for another round of production cuts at its March meeting also undermined prices. Qatar's Oil Minister Abdullah bin Hamad al-Attiyah said the cartel won't decrease production if crude oil stays near its current basket price of $58.34 a barrel, according to Dow Jones Newswires.
Oppenheimer & Co. Analyst Fadel Gheit said that OPEC aims to keep oil within $55 and $65 a barrel. "Now at $60 a barrel is the sweet spot," Gheit said. "It will not kill demand growth for oil. It will slow it, but we won't see people running to conserve energy. People will get used to it."
Escalating tensions between Iran and the United States have buoyed prices lately, but reports on Monday that Iran may participate Saturday in an international conference on Iraq with the United States in attendance also may have "alleviated some of the political premium in the price," of oil, Gheit said.
If both countries attend, it would be the first public U.S.-Iranian meeting in nearly three years.
Washington is pushing for tougher U.N. sanctions on Tehran over its failure to comply with demands to halt its uranium enrichment program. Although the United States has said it has no plans for a military strike, the option has not been ruled out.
Underlying fundamentals for crude oil remain supportive, analysts said.
Last week's U.S. inventories report showed stockpiles of gasoline and distillates, which include heating oil and diesel fuel, dropped by a larger amount than analysts had forecast. Meanwhile, demand for products over the last four-week period rose by 7.5 percent from the same period last year.
Tim Evans, an energy analyst with Citigroup Futures Research, also pointed out that traders appear to be ignoring the return of colder temperatures in the Northeast and a spate of production disruptions, both supportive of prices.
"The crude oil market is more concerned about things that are more potentially bearish than actually bearish," Evans said.
In other Nymex trading, heating oil futures fell more than 4 cents to settle at $1.7248 a gallon, while natural gas gained more than a penny to $7.254 per 1,000 cubic feet. Gasoline futures settled at $1.8447 a gallon, down nearly 6 cents.