Light, sweet crude for May delivery fell 21 cents to $57.25 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Asia. Heating-oil prices also fell by less than a cent to $1.57 a gallon.
Oil is 50% more expensive than a year ago but still well below the inflation-adjusted peak above $90 a barrel set in 1980. (See interactive graphic1).
Oil prices have risen by about a third so far this year, fueled by a late cold snap across the U.S., the world's largest energy consumer. They also have been underpinned by a weak dollar and rising global demand at a time when there is little excess supply available. These factors could set the stage for a more pronounced spike in prices in the event of a production outage.
The Organization of Petroleum Exporting Countries, however, has indicated it is willing to move further to soften prices. Last week, the 11-member oil cartel said it was raising its daily output by 500,000 barrels. (See related article2).
On Monday, Saudi Oil Minister Ali Naimi said OPEC, which produces around 40% of the world's oil needs, was deliberating raising daily output by an additional half-million barrels.
Mr. Naimi, whose country is the organization's main producer, also said Saudi Arabia was prepared to unilaterally increase its output from the present daily 9.5 million barrels to 11.5 million barrels "if we have a customer."
Texas-based Purvin & Gertz oil analyst Victor Shum said OPEC's decision last week to increase output in the second quarter, when demand typically drops because of warmer spring weather, will result in a much-needed global-supply cushion.
"As the cushion expands from the current level, some market participants ought to start taking profits," he said in Singapore. "Pricing should ease a bit."
Some analysts, however, remain wary that there would be no actual addition to OPEC production, as the cartel was already producing above its quota. Mr. Shum also cautioned that OPEC's zeal in increasing output might backfire, as it leaves little leeway in the supply chain for any output glitch.
Meanwhile, Nigeria's two oil unions on Monday threatened to embark on yet another round of strikes, starting April 11.
Nigeria is the fifth-largest crude exporter to the U.S. and threats of strikes by Nigerian oil unions often affect prices on the international market. However, such threats often fail to have any significant impact on actual production. (See related article3).
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