Crude Sees Sharp Decline

Crude futures softened on Monday after a key OPEC minister raised the possibility that the oil cartel may raise its production quota at its next scheduled meeting to counter soaring prices.

December West Texas intermediate crude fell $2.08 to $94.24 a barrel on the New York Mercantile Exchange. Reformulated gasoline slid 5 cents to $2.41 a gallon, and heating oil lost 4 cents to $2.58 a gallon.

Near-term natural gas was 10 cents higher to $8 per million British thermal units.

The moves came after a weekend pronouncement by Saudi oil minister Ali al-Naimi that OPEC members would soon discuss whether to raise output limits to help stymie high oil prices.

Near-term options on oil, many of which are bets that crude would surpass $100, expire on Tuesday. The bearish news from OPEC forced many holders of these options to exit their positions Monday, sending the price of crude oil south.

Meanwhile, energy stocks were broadly lower. Exxon Mobil(XOM Quote) dropped 1.5% to $85.58, and Chevron (CVX Quote) fell 1.6% to $85.90.

Elsewhere, Lehman Brothers downgraded ethanol companies VeraSun (VSE Quote) and Aventine Renewable Energy (AVR Quote) to equal weight from overweight. VeraSun declined 5.6% to $12.04 a share. Aventine Renewable fell 0.8% to $10.20.

Bernstein upgraded shares of Halliburton(HAL Quote) and Baker Hughes(BHI Quote) to outperform from market perform, sending their shares up 3.7% and 2.6%, respectively.

Also, Imperial Oil (IMO Quote) was downgraded by RBC Capital Markets to sector perform from outperform. Shares of Imperial moved 3.4% lower to $53.92.