Oil: al Qaeda threat keeps market jittery

Oil fell back below US$60 a barrel on Wednesday after US inventory data revealed healthy supplies, but nervousness about a new call from al Qaeda to strike oil sites in Muslim states prevented a steeper selloff.

US crude fell 59 cents to US$59.35 a barrel by 1625 GMT, while London Brent slipped 58 cents to US$57.03.

Earlier US crude had climbed to a session high of US$60.68 after five consecutive days of gains.

But selling was spurred by US government data showing a 2.7 million barrel rise in crude stocks to 320.3 million barrels, 32.1 million barrels higher than a year ago.

The data also showed rises, again of 2.7 million barrels, in petrol and distillate stocks, which include heating oil.

"The magic number is 2.7 and it's pretty bearish. We have more of everything," said Timothy Evans, senior analyst at IFR Energy Services in New York.

But traders were reluctant to sell off too sharply after a new threat from al Qaeda.

"I call on mujahideen to concentrate their attacks on Muslims' stolen oil, from which most of the revenues go to the enemies of Islam while most of what they leave is seized by the thieves who rule our countries," al Qaeda's deputy leader Ayman al-Zawahri said in a video interview on an Islamist website.

Al Qaeda claimed a direct hit on Iraq's Basra Oil Terminal in the Gulf last year. Iraq's oil pipelines are regularly put out of action by sabotage.

Cold temperatures in the US Northeast, the world's biggest heating oil market, which were forecast to continue until the weekend, also curbed selling as traders worried a long cold winter could drag down stocks from their current levels.

Stocks have been boosted by high output from the Organisation of the Petroleum Exporting Countries, which has been pumping at around 30 million barrels per day, close to capacity, for much of this year.

The cartel meets in Kuwait next week to reconsider its output policy, but Opec ministers have so far said they are comfortable with current prices and see no need to adjust output.

- REUTERS