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Oil slides despite Opec talk of a floor
[NEW YORK] Oil fell in see-saw trade on Monday, with US crude ending at its lowest in nearly six years, as traders discounted comments from Opec's top official about the market finally finding a bottom.
It was an up-and-down session for crude, which gyrated along with the US dollar in the wake of a decisive Greek election victory by the left-wing Syriza party.
Prices initially rallied after Opec Secretary-General Abdullah al-Badri said oil may have hit a floor and could move higher very soon, the first comments he has made on the subject during crude's seven-month-long price rout.
But the gains proved fleeting as global benchmark Brent fell 1.3 per cent to US$48.16. US crude lost almost 1 per cent, settling at US$45.15, the lowest settlement price for the existing front-month contract.
Following the restart of a major US Midwest refinery unit, the Brent/WTI spread narrowed to US$3.01 after going as wide as US$3.41 on Friday, its widest in three weeks.
Volume was muted by a major snowstorm in the US Northeast, which some traders said would likely have a mixed effect on fundamentals. Just over 520,000 lots of WTI were traded, about a third less than normal.
The blizzard will result in cancelled flights, less driving and increased use of heating oil, creating mixed indicators for crude oil, Matt Smith, an analyst at Schneider Electric, said. "We saw this with Hurricane Sandy," Smith said.
Heavy snow was falling on the US East Coast Monday afternoon, the first signs of a blizzard that may be of historic severity. Officials predicted it could dump up to 3 feet of snow, snarling transportation for millions of people.
Gasoline prices also closed down but off their lows after news that BP Plc's 413,500-barrel-per-day (bpd) Whiting, Indiana, refinery had completed the restart of a 90,000-bpd crude distillation unit and was working to boost its production to planned output levels.
Front-month US gasoline settled down 2.3 per cent at US$1.3167 a gallon, after hitting a session low of US$1.3105.
Saudi Arabia's new ruler, King Salman, pledged continuity in energy and foreign policies on Friday and was quick to retain veteran oil minister Ali al-Naimi, sending a message aimed at calming a jittery oil market.