Oil: Prices rebound from six-month low

After hitting six-month lows the previous session, oil prices rose over US$61 per barrel on Thursday, but big US fuel stocks and hopes talks with Iran could avert a crisis over its nuclear programme limited gains.

US light crude settled up 85 cents at US$61.59 a barrel, while London Brent crude was up 87 cents at US$61.34 a barrel.

"I think we're up here on technicals ... people are also bargain-hunting," said Mike Fitzpatrick, vice president for risk management at Fimat, USA.

The expiring front-month US contract on Wednesday touched a low of US$59.80, before settling at US$60.46, its lowest settlement since March 20, and around US$18 below the US record of US$78.40 hit in July.

The price fall is the sharpest in 15 years and has increased expectations the Organisation of the Petroleum Exporting Countries might act to curb supplies, although opinion is divided on the price level that would trigger an output cut.

"The trends toward US$60 are clear and strong," said Mike Wittner of Calyon investment bank.

He predicted support would come as Asia would probably absorb some of the surplus of available crude, but if that did not happen quickly enough, Opec would cut supplies.

Technical analysts, who study charts of past prices for clues to future direction, said a convincing break below US$60 could lead to a fall to around the US$55 region, although strong resistance around US$58-US$60 could halt the slide.

In Vienna last week, Opec left its output unchanged, but said it could call an emergency meeting before its next scheduled meeting in December if necessary.

Saudi Oil Minister Ali al-Naimi said on Tuesday current prices were reasonable and were not having a big negative impact on global economic growth.

This was the first time Naimi had described the prices as reasonable since the fall from July's peak.

Wednesday's price slide drew momentum from news that ahead of winter in the northern hemisphere, US distillate inventories, which include heating oil, had risen to their highest level since January 1999.

An apparent easing in the crisis over Opec producer Iran's uranium enrichment programme also put downward pressure on oil prices.

Iranian President Mahmoud Ahmadinejad on Wednesday signaled a willingness to negotiate after major powers said Tehran had until early October to suspend its nuclear programme.

- REUTERS