Oil prices were slightly higher Tuesday after a rally the day before lifted crude futures by almost $1 a barrel on worries that the recent drop in prices could prompt OPEC to cut production. Light sweet crude for November delivery on the New York Mercantile Exchange rose 33 cents $61.78 a barrel.
Traders are weighing concerns about rising supplies and slackening demand growth against the likelihood of an OPEC production cut or the return of heated rhetoric between Iran and the West over Tehran's nuclear program.In London, Brent oil was down 54 cents at $60.26 a barrel on the ICE Futures exchange in London.Nymex heating oil futures were steady at $1.6565 a gallon while gasoline prices rose 0.76 cent to $1.5077 a gallon.
Nymex natural gas futures rose 2.5 cents to $4.50 per 1,000 cubic feet Tuesday. The contract slid 15.2 cents Monday amid record U.S. supplies to settle at $4.475 per 1,000 cubic feet â€” the lowest close since Sept. 26, 2003.
The Organization of Petroleum Exporting Countries recently reduced its demand forecast for the remainder of the year because of weaker demand in the U.S. However, some cartel members have insinuated that oil prices below $60 could prompt a production cut, and Eurasia Group energy analyst Greg Priddy said in a research note Tuesday that Saudi Arabia and Kuwait might even make unofficial cuts to their production.
The seasonal softening of demand comes as U.S. inventories of gasoline stood last week at 207.6 million barrels, 6 percent more than last year and slightly above the five-year average for this time of year.
Moreover, the diplomatic standoff between Iran and the United Nations has been marked recently by a more conciliatory tone from both sides. The summer spike in prices was fueled largely by concerns that Iran, which defied the U.N.'s Aug. 31 deadline to stop enriching uranium, might disrupt oil supplies if sanctions were imposed or if the monthlong conflict between Lebanon and Israel escalated.
Fears of hurricane damage to Gulf of Mexico output also drove the market higher this summer, but the storms so far have not threatened the region.Oil prices are down more than 20 percent since hitting an intraday record of $78.40 on July 14.