High stocks seeoil dip below $59

Oil prices slipped below $59 (€46) a barrel yesterday as high fuel stocks in consumer countries blunted the impact of a new attack on Nigerian oil facilities.

Doubts over Opec's determination to push through output cuts also weighed. Investors took little notice of Opec president Edmund Daukoru saying more reductions could follow in December.

US crude was down 31 cents at $58.83 a barrel. Prices ended $1.26 higher on Friday after the US consulate in Nigeria said militants may have imminent plans to launch attacks on oil facilities in the Niger Delta. London Brent crude was 23 cents down at $58.92. The market has traded between $57-$62 for a month, leading some investors to see firmer prices on the horizon.

"The market has failed one more time to break the support of the $57-$64 range . . . The increase in demand is slowly starting to provide more supportive fundamentals," Olivier Jakob of Petromatrix said.

"We would therefore expect crude oil to regain the ground it lost last week."

An oil production facility at Tebidaba, in southern Nigeria, was attacked early yesterday, government and security sources said. The Tebidaba region feeds crude oil to the Brass tanker terminal, which exports about 200,000 barrels per day (bpd).

Violence in the world's eighth largest exporter has cut output by 500,000 bpd since February.

But oil prices have slid 25 per cent since a July peak partly because of high fuel stocks in top consumer the US.

Mr Daukoru said on Sunday all Opec members will fully implement their production cuts, while market conditions may force Opec to cut output further next month.

"A December quota cut may be necessary because the market is still soft," Mr Daukoru said. "$60 will not hurt the world economy."

Venezuela is recommending Opec to take an additional 300,000 barrels per day off the market at its December meeting, to add to a 1.2 million bpd cut agreed from November.

"We see front month WTI crude prices continue to remain rangebound in the high 50s for the coming week," said analysts at JP Morgan.

- (Reuters)