Concerns about slowing economic growth in the U.S. and receding fears about this year's Atlantic hurricane season are also influencing selling that has taken oil down by more than 20 percent since the middle of July.
Still, the possibility of a production cut by OPEC, has brought out bargain hunters in recent days who believe oil is reasonably priced at around $60 a barrel.
Light sweet crude for November delivery fell 59 cents to $61 a barrel on the New York Mercantile Exchange. November Brent crude on London's ICE futures exchange declined 64 cents to $60.70 a barrel.
Houston-based oil consultant Dan Lippe of Petral Worldwide said that with worldwide supplies growing, he wouldn't be surprised to see oil back below $50 a barrel, and perhaps as low as $40, within a few years _ if not sooner.
An unexpected supply shock, of course, could drive oil prices right back above $70, he said.
Crude oil futures have plummeted from a July 14 intraday peak of $78.40 a barrel as worries ease about supply threats from Iran and Nigeria, and as signs of economic weakness in the U.S. point to a possible softening in demand for energy.
"We already took $5 out of the oil price because of geopolitics and we're probably going to take out another $5," said Liberty Trading president James Cordier.
"If we have a mild winter," Cordier added, "all of the fund money that pushed crude up toward $80 a barrel is going to get out of the market."
The Organization of Petroleum Exporting Countries recently reduced its demand forecast for the remainder of the year, citing weakening demand in the U.S., among other factors, and some cartel members have insinuated that oil prices below $60 could prompt talk of a production cut. At its most recent meeting late last month OPEC maintained its current output quota of 28 million barrels a day, and some analysts say it will be difficult to convince oil-producing nations to ease up on production at a time of record profit margins.
But Morgan Stanley said in a research note Friday that "there is already some evidence that OPEC has reduced production from the Middle East and is committed to supporting high prices."
The latest U.S. Energy Department data showed crude oil inventories declined by 2.8 million barrels last week to 324.9 million barrels _ but that's still 5 percent more than last year and well above the five-year average for this time of year.
Inventories of distillate fuels such as diesel and heating oil grew by 4.1 million barrels last week to 148.7 million barrels, or more than 11 percent above year-ago levels.
Analysts say that with geopolitical and weather risks easing _ and speculators taking chips off the table _ energy futures are likely to tumble further before stabilizing. Natural gas is most vulnerable to further declines, at least until the first cold snap arrives in the U.S., they said.
U.S. stocks data showed domestic natural gas inventories increased by 93 billion cubic feet last week to 3.18 trillion cubic feet _ a record level for this time of year and 12.5 percent above year ago levels.
Nymex natural gas futures fell 3.6 cents to $4.745 per 1,000 cubic feet.
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