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Oil deepens losses below $60 after one-week slide

Written by: Staff
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SINGAPORE, Mar 13 (Reuters) Oil prices fell further below a barrel on Monday after dropping 6 percent last week, as swelling U.S. inventories and steady OPEC production outweighed geopolitical jitters in Iran and Nigeria.

U.S. crude for April delivery fell 31 cents to .65 a barrel in opening electronic trade after dropping for four of the last five sessions. Prices have hovered in a - a barrel range for about three weeks.

OPEC's decision last week to carry on pumping at near maximum capacity and a rise in weekly U.S. crude stocks that took them to their highest in seven years has helped refocus market attention on supply fundamentals ahead of the weak-demand second quarter.

The bubbling row between the West and Iran and an ongoing outage in Nigerian exports have limited losses, however.

''I'd be surprised if oil ticks much lower, stocks are good but you only have to have Iran start to threaten the loss of barrels,'' said David Thurtell of the Commonwealth Bank of Australia. ''I expect the Iranians to take this to the wire.'' Dealers will be tracking discussion among the U.N. Security Council about Iran's nuclear programme this week after preliminary talks last week ended without a resolution. The council is expected to issue a statement urging Iran to halt uranium enrichment, stopping well short of sanctions.

U.S. President George W. Bush said on Friday he was looking for a diplomatic solution to the row, which dealers fear could prompt the world's fourth-largest exporter to cut supplies.

At the weekend Foreign Minister Manouchehr Mottaki was the latest Iranian official to say that Tehran would not use its oil as a political weapon, although other officials have said this policy could change in the future.

''The Islamic Republic of Iran is resolved to provide Asia with the energy it needs as a reliable and effective source of energy and will not use oil as a foreign policy,'' Mottaki said.

In Nigeria, the closure of 455,000 barrels per day (bpd) of production -- a fifth of the OPEC member's total -- dragged into a third week with little sign of a permanent resolution to Niger Delta militants' months-long campaign of oil attacks.

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