Oil prices turn lower with inventories, OPEC in focus

LONDON, Dec 7 (AFP) - Oil prices slipped Tuesday, giving back the previous day's gains as markets looked ahead to weekly US petroleum inventory data and a this week's OPEC meeting, and following the end of a blockade in oil-rich Nigeria.
New York's main oil contract, light sweet crude for delivery in January, fell 58 cents to 42.40 dollars a barrel.
In London, Brent North Sea crude oil for January delivery dropped by 90 cents to 38.75 dollars a barrel.
Oil prices had rebounded on Monday, arresting a three-day, 13-percent price slide on concerns about an attack on a US consulate in Saudi Arabia and the possibility that the 11-state OPEC might seek to rein in output at Friday's meeting.
However with opinion split as to what the cartel might decide at its gathering in Cairo, the market weakened after a blockade of three oil pumping stations ended in the volatile Niger Delta region.
Protesters from the ethnic Ijaw community had occupied the stations since Sunday morning but lifted the blockade after energy giants Shell and ChevronTexaco agreed to discuss funding local development projects.
Much focus remained on the OPEC meeting, amid speculation as to whether ministers would boost prices by trimming current over-production above official ceilings, or even cut the quotas themselves.
"The general consensus is that OPEC is not going to cut production quotas," said Graham Sharp, a broker with Trafigura.
But he added: "The fact that the prices went down so much last week means obviously that it is a bit more likely that OPEC might cut production."
OPEC's official output ceiling is 27 million barrels per day, excluding Iraq, which is excluded from the cartel's system of quotas.
However the cartel's 10 members included in the quota system, which misses out Iraq, are estimated to be producing about 1.0-1.5 million barrels above the official ceiling.
"There is a very, very slim chance they change the quota, but obviously they are producing significantly above the quota, and most of that extra production is coming from Saudi Arabia, so the key is really what the Saudis say," said Sharp.
Indonesia's Energy Minister Purnomo Yusgiantoro, who is also OPEC president, said Tuesday he wanted the oil cartel to raise its target oil price band of 22-28 dollars to reflect the US currency's slide.
"The (price band) increase must be adjusted in line with inflation and the (Indonesian) rupiah's appreciation toward the dollar," Yusgiantoro said in Jakarta.
However, Iranian Oil Minister Bijan Namdar Zanghaneh said Monday the price band was unlikely to be changed at Friday's meeting.
Traders were also waiting for direction from weekly estimates of US commercial petroleum stockpiles due to be published on Wednesday.
Prices fell sharply last week after a US government report showed a surge in commercial petroleum inventories, particularly distillates such as heating oil, with the onset of the northern hemisphere winter.

12/07/2004 17:21 GMT - AFP