Big chill hits oil price

LONDON - Oil prices closed flat yesterday, handing back earlier cuts on news of falling US fuel stockpiles and forecasts of more cold spells heading to North America.

Tensions in the Middle East, where intense diplomatic efforts were under way to end Israeli-Palestinian violence and rescue the peace process, also helped to keep prices strong.

Weather forecasters said the US northeast - already hit by a cold spell - was set to take two more chilly blasts in the coming week.

The main driving force behind the sharp price rises, however, was a fall in US crude-oil and product stocks.

Algerian Energy and Mining Minister Chakib Khelil said Opec would lift output by 500,000 barrels a day under its price-band mechanism before the cartel's November 12 meeting if prices stayed above a $US28 threshold.

If the cartel's crude-oil-basket price stays above that level for 20 working days - or below $US22 for 10 working days - crude oil output would be adjusted by 500,000 barrels a day.