According to reports, oil prices fell by three per cent Monday, slipping below $59 a barrel as traders looked ahead to U.S. supply data due out Wednesday that is expected to show rising inventories of crude.
Doubts about OPEC's ability to implement a 1.2 million barrels a day production cut also weighed on prices.
Last week, oil prices surged after the U.S. Energy Department data showed a large decline in crude-oil inventories. But some analysts believe the market overreacted to the data by failing to account for the impact of a temporary shutdown of the Louisiana Offshore Oil Port, through which 10 per cent of all U.S. oil imports flow.
Light sweet crude for December delivery fell $1.99 to $58.76 a barrel on the New York Mercantile Exchange, where gasoline futures tumbled by almost seven cents to $1.49 a gallon. In London, Brent crude fell by $2.01 to $59.07 on the ICE Futures exchange.
Oil traders are watching to see how quickly the 11 members of the Organization of Petroleum Exporting Countries move to cut production after announcing that as a group they would reduce output by 1.2 million barrels day.
In its daily energy report, Vienna's PVM Oil Associates suggested that the market may not be convinced all the production cuts would be enacted.
Prices rose Friday after a British navy official said that a threat from al-Qaida last month targeting Gulf oil terminals resulted in stepped-up security and vigilance at Saudi Arabia's Ras Tanura terminal, as well as a refinery in Bahrain.
Significant cuts, along with the arrival of winter weather to the Western hemisphere, could raise the floor under the market, however, with demand for heating oil and natural gas leading the way.
In other Nymex trading, heating oil futures fell by more than three cents to $1.6598 a gallon, and natural gas futures declined by more than 28 cents to $7.540 per 1,000 cubic feet.
Source: CBC News