Oil slides to $58 a barrel

SINGAPORE—Oil slid to around $58 a barrel on Wednesday, taking losses for the week to more than 7 percent and London Brent crude to its lowest this year, on forecasts of a further rise in bulging U.S. fuel stockpiles.
U.S. crude declined 37 cents to $58.31 by 0634 GMT, taking the market to the weakest level since mid-February after a $2.35 fall the previous day. London Brent shed 41 cents to $58.02, after hitting $57.78, the lowest since December 30, 2005.
Analysts forecast a draw of 500,000 barrels in U.S. crude stocks last week but a build of 1.5 million barrels in distillate supplies and a gain of 700,000 barrels in gasoline inventories, in government data due later on Wednesday .
"Inventories are huge -- sentiment is completely bearish," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. "People were looking at $100 but that was wrong, so people are liquidating long positions."
Oil prices have plunged from a record $78.40 in mid-July, under pressure from high U.S. distillate and gasoline stocks, slowing growth at the world's largest economy and dissipating political tensions over Iran's nuclear program.
If the forecasts hold, distillates will have built for the last eight weeks running, and stocks are already up 15 percent from a year ago. Gasoline stocks are more than 9 percent higher.
The brimming U.S. inventories, coupled with the slide in oil prices, prompted OPEC President Edmund Daukoru, who is also Nigeria's top oil official, to urge other members of the producer cartel on Tuesday to make deeper export cuts.
Venezuelan Energy and Petroleum Minister Rafael Ramirez told reporters on Tuesday that oil markets were oversupplied by 500,000 barrels per day.
But there was no evidence of other OPEC members joining Nigerian and Venezuelan moves to trim output.
The fading threat of strong hurricanes -- such as Katrina and Rita, which pounded crude and refinery production in the U.S. Gulf Coast region last year -- added to the bearish tone.
Noted hurricane forecaster William Gray at Colorado State University said on Tuesday the milder-than-expected Atlantic season will produce just two more tropical storms and no more "major" hurricanes due to El Nino conditions in the Pacific.
Despite the benign hurricane season, BP Plc (BP.L) expects its oil and gas production to have fallen in the third quarter by 24,000 barrels of oil equivalent per day to 3.8 million boepd on the back of problems at its Alaskan fields, it said on Wednesday.
On the geopolitical front, though the United States and Britain said on Tuesday that Iran could soon face sanctions because it showed no sign of halting its nuclear work, fears of potential lost supply were cushioned by official U.S. data.
The U.S. Government Accountability Office said on Tuesday the U.S. and world emergency crude oil reserves could replace a complete shut-off of Iranian oil exports for 18 months, avoiding an estimated $201 billion in damage to the U.S. economy.
But given a risk of further supply disruptions and higher winter demand, some analysts expect price weakness to be fleeting.
"I would think anything below $60 is a buying opportunity so on a technical perspective, prices would see a rebound soon," said Gerard Burg, a commodities analyst at the National Australia Bank.--Agencies—Agencies