Another Slide for Oil

Updated from 2:29 p.m. EST

Crude futures dropped again Tuesday after a Saudi official downplayed the need for OPEC to plan further production cuts to boost the price of oil.

Nearby contracts for light, sweet crude closed down $1.78 at $51.21 a barrel on the New York Mercantile Exchange. The oil exchange-traded fund iPath Goldman Sachs Crude Oil(OIL Quote - Cramer on OIL - Stock Picks) also moved lower, giving up 2.8%.

The price of natural gas rose 4 cents to close at $6.64 per million British thermal units. Heating oil was at $1.48 a gallon, down 2 cents, while gasoline dipped 6 cents to $1.37.

Saudi oil boss Ali Naimi said new OPEC crude output reductions might not be needed. He also said there was no need to panic about the steep decline in futures in recent weeks.

Last week market watchers speculated that the cartel might hold an emergency meeting to lower production on top of the cuts announced already, which so far total 1.7 million barrels a day. But it appears that member countries may not have been as compliant as had first been hoped.

"OPEC seems to be losing credibility in terms of production cuts," says Jason Schenker, an economist at Wachovia in Charlotte, N.C. "Slowly the production is rising," and there is "ubiquitous cheating" among members, he says.

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