Oil: Price falls below US$60, investors doubt Opec

LONDON - Oil fell below US$60 today as investors doubted Opec's resolve to carry out a planned supply cut and fuel inventories swelled in top consumer the United States.

US crude CLc1 fell 38 cents to US$59.65 a barrel by 1709 GMT. The market has dropped almost US$20 from its mid-July peak of US$78.40. London Brent LCOc1 fell 31 cents to US$59.69.

Opec President Edmund Daukoru said today he aimed to secure a supply cut deal by Tuesday that would remove about 1 million barrels per day of crude from the market to slow the rapid decline in oil prices.

But investors were wary as the group has yet to make an official statement on the planned cuts.

"It is a big surprise to the market that Opec has not been prepared to formally announce the decision to cut," said Frederic Lasserre, head of commodity research at SG CIB Commodities.

"It looks like it may take some time for Opec to decide how to allocate this cut and that is bearish, not bullish."

Opec members have discussed but not yet decided whether to hold an emergency meeting on Oct. 18-19 in Vienna, Daukoru said.

A cut of a million bpd would remove about 3.4 per cent of total Opec supply from the market.

Investors turned their attention back to ample supplies and high stocks as they waited for official word from Opec, which pumps over a third of global oil supplies.

"If Opec is not able to get any credibility in reducing supply then we are back to fundamentals," Lasserre said.

"And the fundamentals are that we have plenty of stocks around -- they are still building up -- which means that the market is oversupplied quite substantially."

US distillate supplies, which include heating oil, rose 200,000 barrels to their highest level since 1999 last week, according to a government report this week. EIA/S

Crude oil and petrol stocks were substantially higher than at the same time last year.

Despite the high stock cushion, Opec's plan to cut supply has disappointed the world's top oil consumer.

US Energy Secretary Sam Bodman said he did not want Opec to cut output and White House economic adviser Al Hubbard said President George W. Bush was not happy with oil prices near US$59 a barrel.

- REUTERS