Oil prices drop below $60 a barrel

Oil prices retreated below the psychologically important $60-a-barrel mark in Asian trading Thursday ahead of the release of the U.S. government's fuel stocks data later in the day.

Light, sweet crude for April delivery dropped 9 cents to $59.98 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore.

The upside target may be as high as $61 a barrel, said Ken Hasegawa of Tokyo brokerage Himawari CX, adding that market action in coming days may see prices move into the $57- to $62-a-barrel range.

The contract rose 2.1 percent Wednesday to settle above $60 a barrel for the first time this year following a pipeline and oil field shutdown and increasing tensions over Iran's uranium enrichment program.

TEPPCO Partners LP said Wednesday that part of a refined products pipeline was shut down after a leak was discovered in Indiana, according to Dow Jones Newswires. TEPPCO gave no estimate of how much diesel was lost or when the pipeline will be back in service.

BP shut down its Northstar oil field in the Arctic Ocean late Tuesday after a small leak was found in a gas line. The shutdown has taken about 40,000 barrels of oil off-line each day, according to a BP spokesman. The company doesn't know when the field will resume operations.

The International Atomic Energy Agency, the U.N. nuclear watchdog, was expected to confirm Thursday that Iran _ OPEC's No. 2 exporter _ continues to enrich uranium, a finding that could trigger harsher U.N. sanctions.

On Wednesday, Iran called for talks with the U.S. regarding its uranium enrichment activities, but showed no signs of halting its program.

Data from the U.S. Department of Energy due later Thursday was expected to show domestic crude oil stockpiles rose in the week ending Feb. 16, while distillates are falling, according to a Dow Jones Newswires survey of nine analysts.

Crude oil inventories were expected to build by an average of 700,000 barrels, according to analysts' forecasts. Distillates, which include heating oil and diesel, were expected to fall by 2.8 million barrels.

Gasoline inventories should increase by about 100,000 barrels.

In other Nymex trading, heating oil futures lost 0.16 cents to $1.68 a gallon, while natural gas prices rose 4.4 cents to $7.69 per 1,000 cubic feet.