Oil: Price falls to four-week low

NEW YORK - Oil prices slumped to their lowest level in nearly four weeks on Monday as Opec members signaled they may leave production unchanged through the rest of the winter.

US crude futures settled down US$1.20 to US$45.28 a barrel after touching US$45.10, the lowest since January 12. London Brent fell 79 cents to US$43.10.

The losses extended crude's slide to about 9 per cent since Opec's last meeting on January 31 at which members agreed to hold their production steady but left open the door to possible snap cuts to be agreed by telephone.

At the weekend, two Opec producers indicated that prices hovering well above US$40 a barrel looked likely to stave off any decision to slash output at least until the cartel's next official meeting on March 16.

The prospect of steady output from the cartel until spring could mean continued increases in fuel stockpiles in the United States, the world's largest energy consumer, where unseasonably mild weather is already cooling demand for heating oil.

"We will wait until March (for any output decision), " Algeria's Energy and Mines Minister Chakib Khelil said on Saturday.

Opec President Sheikh Ahmad al-Fahd al-Sabah reiterated that ministers would need to discuss taking action if prices moved sharply in either direction or if commercial oil inventories climbed too sharply.

"Until now, I don't think there's any need for any consultations," Sheikh Ahmad, also Kuwaiti oil minister, told reporters on Saturday. "Our worry is not now; our worry is the second quarter," said Sheikh Ahmad.

Opec, which controls 40 per cent of world oil exports, has been wary of a springtime decline in global demand.

Winter supply fears are ending well-before the season amid forecasts that the heavy-consuming US Northeast may have already endured the worst cold.

Several private forecasters are calling for warmer than usual conditions to prevail in February and March, limiting use of heating oil.

"Although nearly two months of climatic winter remain ahead of us, the market already has its attention elsewhere," said SG Commodities in a report.

Traders are increasingly focused on the second-quarter demand slump and, beyond that, the petrol-driven boost in the summer, with higher motor fuel stockpiles raising hopes that the United States may avert a spring price spike for the first time in two years.

US crude oil inventories are running about nine per cent above last year while petrol stocks are up by about four per cent over last year, according to government data.

Adding to the bearish outlook, Iraq expects to restart its northern oil export pipeline in five or six days, ending a stoppage of more than seven weeks due to sabotage.

The pipeline to Turkey has been idle since Dec. 18, forcing Iraq to rely entirely for exports on seaborne shipments from the southern oil terminal of Basra. Baghdad exported around 1.43 million barrels per day in January, down from 1.50 million bpd in December.

- REUTERS