Oil Prices Dip Below $60 a Barrel

WASHINGTON – Crude oil prices dipped below $60 a barrel Thursday, moving in the same direction as natural gas prices, which fell after government data showed an abundance of domestic supply.

Light sweet crude for April delivery on the New York Mercantile Exchange fell 7 cents to $59.95 a barrel in midday trading. The contract fell $1.56 Wednesday after OPEC’s president said the group would maintain its current output quota of 28 million barrels per day for the time being.

Nymex natural gas futures slid by more than 10 cents to $6.54 per 1,000 cubic feet after the Energy Department said in a weekly report that domestic supplies in the lower 48 states were 54 percent higher than the five-year average for this time of year. The agency said natural-gas storage volumes declined by 85 billion cubic feet last week to 1.89 trillion cubic feet.

Gasoline prices rose almost 3 cents to $1.68 a gallon while heating oil gained less than a penny to $1.70 a gallon.

Edmund Daukoru, Nigeria’s oil minister and president of the Organization of Petroleum Exporting Countries, said Wednesday output would remain unchanged but that the cartel would monitor it closely between now and its next meeting in Venezuela on June 1.

Meanwhile, the U.S. Department of Energy’s Energy Information Administration on Wednesday said U.S. crude stocks rose by 6.8 million barrels in the week ending March 3 to 335.1 million barrels – the highest level since 1999.

The increase was attributed to a rise in imports and a fall in refinery use due to seasonal maintenance, which created a back up.

The EIA also said gasoline inventories fell 1.1 million barrels to 224.8 million barrels and distillate fuel inventories – which include heating oil and diesel – fell by 2.7 million barrels to 131.4 million barrels. Both remain above the upper end of the average range for this time of year, the EIA said, but gasoline stocks are now 0.5 percent below year-ago levels and gasoline demand is 2.5 percent higher.

Meanwhile, traders are paying close attention to the nuclear ambitions of Iran, the second-largest producer within OPEC.

An increasing number of countries have come to share the U.S. view that Tehran is seeking to develop atomic weapons, but Tehran claims its nuclear program is peaceful and only aimed at generating electricity.

Tehran on Wednesday threatened the United States with “harm and pain” if it tried to use the U.N. Security Council – which has the power to impose sanctions – as a lever to punish Tehran for its nuclear program.

Iran’s minister of petroleum, Sayed Kazem Vaziri Hamaneh, insisted that the Islamic republic would not cut back on or halt its oil exports.

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Associated Press Writer Jane Wardell in London contributed to this report.