OPEC unlikely to cut output

Crude oil fell for a third day on speculation the Organisation of Petroleum Exporting Countries (Opec)will refrain from reducing output further when it meets this week.

Compliance with previous production cuts is very good, making it unlikely that OPEC needs to act again, the oil ministers of Qatar and the UAE said. Crude also fell on expectations that milder US weather will cut fuel demand.

"Thursday's OPEC get-together will not provide much relief to the oil bulls - the cartel will be standing pat,'' Edward Meir, a commodities analyst at Man Financial Inc. in Connecticut, said in a report. "Temperatures in the US northeast will average above normal for the next 6-10 days. Winter, it seems, could finally be over.''

Crude oil for April delivery fell as much as 78 cents, or 1.3 per cent, to $59.27 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $59.81 at 9:20 am in London.

Brent crude oil for April settlement fell as much as 73 cents, or 1.2 per cent, to $60.40 a barrel in electronic trading on the ICE Futures exchange in London. It was last at $60.96 a barrel.

OPEC promised to cut supply at its last two meetings in October and December by a combined 1.7 million barrels a day, to compensate for a post-winter decline in heating oil demand and keep crude in New York near $60 a barrel.

"There's no need to do anything if prices remain as they are,'' Abdullah bin Hamad al-Attiyah told reporters today in Dubai. The United Arab Emirates Oil Minister Mohamed al-Hamli told reporters in Dubai that compliance is very good. It's improving all the time.''

OPEC will meet on March 15 to review supplies and the global demand for oil in the second quarter.

"There won't be a short reduction if prices remain within a band they feel comfortable with,'' said Jakob Schoechli, an analyst at Clariden Leu in Zurich. "We saw considerable fluctuations last month so they will remain flexible.''

Temperatures in the US Northeast, the nation's biggest consumer of heating oil, may rise to normal levels in the week ending March 25, according to the National Weather Service.

Demand for oil products in the US fell a second time in the week ended March 2, the Energy Department said last week. Total product demand averaged 21.3 million barrels a day, a five-week low, as deliveries of distillates, including heating oil and diesel, fell 4.5 per cent.

Heating use in Northeast may be 14 per cent below average in the week to March 16, according to forecaster Weather Derivatives, a forecaster based in Belton, Missouri.

Heating oil for April delivery fell as much as 2.16 cents, or 1.3 percent, to $1.6906 a gallon in after-hours trading and traded at $1.7022 in New York.

"Temperatures in Chicago are expected to average about 20 per cent above-normal, cutting implied heating demand by around 40 per cent week-on-week,'' Stephen Schork, president of the Schork Group of Villanova, Pennsylvania, said in a report. "In New York City, temperatures are expected to come in around 15 per cent above normal; this in turn will cut heating demand by around half week-on-week.''

OPEC's basket price, a weighted average of 11 blends produced by OPEC nations, fell 44 cents to $58.20 a barrel on March 9, the latest available data.