LONDON (AP) _ Oil prices fell below $60 a barrel Monday amid signs of growing petroleum inventories and after BP PLC said it had permission to restart the eastern half of Alaska's Prudhoe Bay oil field.
``Hedge funds and investors have been bailing out because geopolitical tensions have eased and they also realize that inventories are high during this period of seasonally weak demand at the end of summer,'' said Victor Shum, an analyst with Purvin & Gertz.
Light, sweet crude for November delivery fell 84 cents to $59.71 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. November Brent crude on London's ICE Futures exchange dropped 85 cents to $59.56 a barrel.
As oil prices have fallen, so have prices at the pump. The Lundberg Survey of 7,000 gas stations across the United States showed Sunday that retail gasoline prices dropped nearly 24 cents a gallon in the past two weeks, the third consecutive decline since a mid-August peak. The national average for self-serve regular was about $2.42 on Friday, according to the survey.
Gasoline futures on the Nymex slid 2 cents to $1.4511 per gallon Monday, while natural gas futures fell nearly 18 cents to $4.450 per 1,000 cubic feet _ after its lowest close last week since Sept. 10, 2004. October heating oil futures declined 1.6 cents to $1.6304 a gallon.
BP said Friday it will restart a portion of its Prudhoe Bay eastern operating area, as it conducts an inspection of the crude-oil pipeline.
A leak in March at Prudhoe Bay spilled up to 267,000 gallons, the largest in the history of oil production on Alaska's North Slope. A smaller spill last month led to the shutdown of more than half of Prudhoe Bay's normal production of 400,000 barrels a day. Both spills are being blamed on corrosion.
Oil prices have fallen since the beginning of the month on the lack of developments in the standoff between the United Nations and Iran, who defied the U.N.'s Aug. 31 deadline to stop enriching uranium.
The high prices in July and August were largely fueled by concern over the possibility that Iran could disrupt oil supply if sanctions were imposed or if the monthlong conflict between Lebanon and Israel escalated.
Fears of hurricane damage to U.S. Gulf Coast refineries also drove the market higher this summer but the storms so far have blown past the coast.
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.
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 is still 5 percent more than last year and well above the five-year average for this time of year.