Oil prices slid below $60 a barrel Tuesday, as traders focused on an upcoming snapshot of U.S. supplies that will likely show modest increases in crude and gasoline stocks.

Prices edged downward after climbing nearly a dollar the day before on threats of violence in Nigeria and a suggestion that OPEC may need to further cut its output.

Light sweet crude for December delivery dropped 5 cents to $59.97 a barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. Prices had gained 88 cents in Monday's trading after armed protesters shut down a Nigerian oil pumping station.

December Brent crude on London's ICE futures exchange lost 3 cents to $59.73 a barrel.

"Traders are still looking for clues for clear direction," said Ken Hasegawa, an analyst with Himawari CX in Tokyo.

The long-term outlook, however, appeared bullish, with the International Energy Agency saying that governments around the globe must substantially increase their investment in the infrastructure that carries energy supplies to prevent a global shortage by 2030.

In its 2006 World Energy Outlook, the IEA said global energy needs will surge 53 percent by 2030, with more than 70 percent of that increase coming from developing countries, led by China and India.

Oil prices have retreated significantly from a summertime high above $78 a barrel, trading in a range of around $57-$61 a barrel over the past month as traders look for demand clues in weather and economic forecasts and weigh them against OPEC's plans to curb supplies by 1.2 million barrels a day.

Some members of the Organization of Petroleum Exporting Countries are concerned that prices have already fallen far enough from their July peak.

OPEC President Edmund Daukoru, also Nigeria's oil minister, said the oil cartel may need to further cut its output but that it doesn't have a specific price floor or band that it wants to defend.

"OPEC doesn't have a rigid floor," Daukoru told reporters Tuesday during a visit to South Korea. Setting a target price band "is not really applicable to the fluid, free market."

"The market is clearly oversupplied," Daukoru said a day earlier.

Daukoru described the current price of oil as "low." Regarding OPEC's decision last month to cut production effective Nov. 1, he said the effects of the reduced output have yet to be seen, but would be soon.

Daukoru told reporters that when OPEC meets in December they will discuss production, "but it looks as if some further mopping up will be necessary."


Last week, U.S. crude oil inventories rose by 2 million barrels to 334.3 million barrels. Demand is currently low as the cold winter season in the Northern Hemisphere has yet to set in.

Vienna's PVM Oil Associates predicted that Wednesday's U.S. inventory figures will "show a modest increase of crude stocks by 290,000 barrels, due to healthy import figures."

"A 200,000 barrel stockdraw in distillate stocks is anticipated, while gasoline inventories are expected to be up by 240,000 barrels supported by higher refinery runs," it said.

Nymex heating oil futures fell by half a cent to $1.7131 a gallon, and unleaded gasoline futures dropped nearly a cent to $1.5199 a gallon. Natural gas futures fell 10 cents to $7.388 per 1,000 cubic feet.