KEY POINTS:
LONDON - Oil nudged up near US$62 today as oil ministers arriving at an Opec meeting indicated they were likely to cut output once more.
US crude prices traded 62 cents higher at US$61.85 a barrel at 3.43pm Tuesday GMT (4.45am today NZT) after losing 81 cents yesterday.
London Brent crude gained 50 cents to US$62.32 a barrel.
Traders were also awaiting monthly figures from the International Energy Agency, the oil consumers' group, that tomorrow will show how Opec's last output cut has affected stockpiles in the United States.
Ministers from the Organisation of the Petroleum Exporting Countries (Opec) have sent mixed signals ahead of their meeting, scheduled for Thursday in the Nigerian capital Abuja.
But a consensus seemed to be building that the market is still over-supplied since they agreed a 1.2 million barrel cut in November, with a narrow majority of members saying they backed a cut of at least 500,000 barrels per day (bpd).
Kuwaiti Oil Minister Sheikh Ali al-Jarrah al-Sabah and his United Arab Emirates counterpart Mohammed bin Dhaen al-Hamli were just two of the arriving ministers who said there was too much crude in the market.
"We don't cut unless it is absolutely necessary," Hamli said. "Certainly the market is oversupplied, that is a fact, we all know this."
The International Energy Agency figures tomorrow along with weekly US data due for release on the same day, will give a picture of energy demand in the world's largest consumer.
"It may well be that the delegates make their decision on Wednesday night, and the Opec ministers will certainly be looking at the IEA report," said Mike Wittner, global head of energy market research at Calyon.
"Having created expectations of a cut, then they risk losing a couple of bucks if nothing is done, so a small cut -- say 500,000 barrels per day -- could be a way out."
Opec, which pumps more than a third of the world's oil, has implemented about 730,000 bpd of its promised 1.2 million bpd cutback from November, according to a Reuters survey.
Analysts in a Reuters poll expected crude stocks to have fallen by 700,000 barrels last week as refineries crank up output ahead of the peak winter demand period. But they will remain high since they have reached their highest level for this time of year since 1993.
Oil ministers also pointed to the weakening dollar, which reduces Opec's purchasing power from dollar-denominated oil, as another concern that would affect its calculations when it came to acting to stem a 22 per cent oil price slide since a record over US$78 in July.
"It reflects negatively on our values, yes, there was concern about that," said Qatari Oil Minister Abdullah al-Attiyah.
Opec linchpin Saudi Arabia has already told oil refiners in Asia that it will reduce their supplies next month to 8 per cent below contracted volumes. About half of the kingdom's 7 million bpd of crude exports move to Asia.
(Additional reporting by Neil Chatterjee in Singapore, and Simon Webb)
- REUTERS