A gasoline sell-off sent US oil prices lower on Thursday after Opec's widely expected decision to keep existing oil output curbs in place. US crude fell 61 cents at $57.55, giving up an earlier gain of about 23 cents. London April Brent crude was down 15 cents at $60.91.
US gasoline led the way, with the benchmark contract falling 4.67 cents, or 2.4 percent, to $1.8816 a gallon as dealers corrected a recent rally leading into the summer driving season. "Gasoline is down today as there have been some unwinding of crack spreads," said Jim Ritterbusch, president and analyst at Ritterbusch & Associates in Galena, Illinois, referring to the difference between crude and gasoline prices.
Energy markets are keenly watching tight gasoline supplies in the world's biggest oil consumer heading into peak demand this summer, though many experts expect a rebound in production from refineries coming out of seasonal maintenance.
Opec's decision at its meeting in Vienna to maintain supply restraints and not pump more oil partly reflects concerns about falls in world equity markets in past weeks, which could signal an economic slowdown and dampen oil demand.
"We are watching developments on world stock markets, to assess their possible impact on the global economy and, in particular, on energy demand," Opec President and United Arab Emirates' Oil Minister Mohammed bin Dhaen al-Hamli said.
Opec, the source of more than a third of the world's oil, had agreed cuts of 1.7 million barrels per day at two previous meetings since October. On Wall Street, US stocks trimmed gains after former Federal Reserve Chairman Alan Greenspan said there is a risk that problems in the subprime mortgage market will spill over into other sectors.
Opec raised slightly its forecast for world oil demand growth in 2007, saying this would be 1.3 million bpd, up 0.1 million bpd from its previous estimate. The organisation's Monthly Oil Market Report also highlighted risks to world economic growth that could hit consumption.
But the International Energy Agency, which advises 26 industrialised countries, believes the world needs more Opec oil. The IEA has predicted that oil stocks in industrialised countries could see their biggest fall in more than 10 years as Opec holds back supplies. Oil prices are well below their July 2006 peak of $78.40, but have rebounded from January lows below $50.
The latest snapshot of inventories in the United States, the world's biggest oil consumer, showed a 2.5 million barrel decline in gasoline stockpiles last week from the week before. US commercial crude stocks rose a modest 1.1 million barrels on the week, but the level was more than 16 million barrels lower than a year earlier.
Tim Evans of Citigroup Futures Research in New York said that the surprise from Thursday's Opec meeting is that the cartel does not have another scheduled meeting until September. It usually meets quarterly.
"We'd be interested to have more background on the decision to skip June, but can say that waiting until September is, if anything, bullish as it will wait until then to address a projected second-half deficit," he said in a research note.