Updated from 11:57 a.m. ESTEnergy prices cooled off Tuesday as OPEC ministers signaled they wouldn't cut production, and an end seemed near to Iran's nuclear standoff. The head of the International Atomic Energy Agency said the dispute with Iran could be resolved within a few days, averting trade sanctions. For weeks, energy markets have been roiled by Iran's efforts to restart nuclear research, an action European and U.S. authorities view as a prelude to weapons production. Iran announced last month that it had restarted small-scale uranium enrichment to generate electricity. As a compromise, negotiators have been meeting to discuss a plan in which Moscow would enrich uranium for Iran. Separately, a flurry of OPEC ministers have said in recent days that there is no need to trim the cartel's output. The group of 11-oil producing countries has been pumping at 25-year highs to help Northern Hemisphere countries meet winter demand after hurricanes shut down much of the Gulf of Mexico's oil production. Although OPEC has been producing nearly 28 million barrels of oil per day, it hasn't been enough to meet rising demand. "If demand continues to be strong and supplies are low, you need as much oil as OPEC can produce," said Adam Sieminski, chief oil economist at Deutsche Bank in New York. Crude for April delivery closed down 83 cents to $61.58 per barrel on the Nymex, and will likely drop further if the Energy Department's supply report comes in as expected tomorrow. Analysts surveyed by Bloomberg expect stockpiles to have risen by 1.75 million barrels for the week ended March 3. The Energy Department will release its weekly supply figures, which the markets eye carefully for insight into domestic supply and demand trends, at 10:30 a.m. EST on Wednesday. Crude inventories have climbed for the past three weeks and are now 9% above a year ago. Prices could quickly reverse course, though, if Iran doesn't come to an agreement with the West over its nuclear program. "The situation with Iran is, of course, a major wildcard vis-a-vis our near-term oil outlook. Should there be a further escalation of the nuclear dispute, inventory builds will be the last thing about which the market will care," wrote J. Marshall Adkins, an energy analyst at Raymond James in Houston, in a client note. Every time a new rumor or news of production problems float through the Nymex, oil prices rise. Because world oil supply is so tight, traders typically buy futures with every rumor. There's an estimated 2 million barrels extra of spare capacity in the world, and much of it is heavy, sour crude which costs more to refine and is not as heavily prized as oil with low amounts of sulfur. Unleaded gasoline lost 2 cents to $1.63 a gallon, while heating oil declined 3 cents to $1.72 a gallon. The outlook for gasoline stocks, which are essentially unchanged at 225.9 million barrels, was mixed, with some analyst expecting a drawdown and others predicting an increase. Distillates, which include heating oil, are at 134.1 million barrels, 14% higher than a year ago, and will likely drop 1.5 million barrels. Even if they do decline, heating oil is likely to remain at unseasonably high levels because the winter heating season is drawing to a close. Natural gas, used to produce electricity and power commercial and residential furnaces, ended up 13 cents, or 2%, to $6.68 per million British thermal units, but is bobbing around last summer's prices. The heating fuel hit a nine-month low yesterday thanks to a 14% surplus and warmer weather. As temperatures rise, heating demand drops and stockpiles rise. Prices for natural gas futures will likely remain low as another spell of unseasonably warm weather returns to the Northeast, the largest market for heating fuel. Temperatures will rise from the 30s and 40s to the upper 50s and 60s, AccuWeather.com, a State College, Pa. weather forecaster, said. The drop in energy prices was pulling down the energy sector, with the Amex Oil Index falling 1.1% and the Philadelphia Oil Service Index dipping 2.7%. Even though Chevron ( CVX)said it would increase its capital spending 8% to $16 billion in 2007, shares of the supermajor were losing 72 cents, or 1.3%, to $55.13. This year, Chevron estimates it will spend 35% more, or $14.8 billion this year.