Oil prices slid to a six-month low today on rising winter fuel stocks and waning concern over Iran, but the world's largest exporter Saudi Arabia signalled the market may have fallen enough.
US crude was down 89 cents at $60.77 a barrel at noon after touching $60.61, the lowest since March 21st. Oil has retreated over $17 from its July record high of $78.40 in its steepest decline for 15 years.
London Brent was down 81 cents at $61.36. The slide has revived discussion about what price would trigger a cut in OPEC production to stem the fall. Saudi Oil Minister Ali al-Naimi yesterday described prices as reasonable for the first time since the market scaled record highs.
"The oil industry is convinced that this price is reasonable," Mr Naimi told reporters in Riyadh. "Prices now are rewarding to both producers and consumers and their impact on the global economy is small."
Some OPEC ministers have signalled a price of $50-$60 a barrel should be sustained, but the cartel has avoided setting a formal target. The OPEC basket stood at $58.85 yesterday.
"It all depends now on how fast the price declines," said BNP Paribas analyst Eoin O'Callaghan.
"It would be difficult for OPEC to justify a cut with the U.S. price above $60 and concerns about a US economic slowdown. But it is our view that sometime in the near future OPEC will have to cut."
Data due later today is expected to show brimming US fuel inventories rising further.
Distillate stocks were already near seven-year highs last week. Fuel inventory levels have bolstered perception among investors that the world's biggest oil consumer is well prepared to meet winter demand. Stocks are also high in other large consumers Japan and Germany.