Oil: Oil slides ahead of Opec meeting

NEW YORK - Crude oil prices slumped on Friday as producer group Opec appeared poised to keep supplies flowing near full-tilt through the rest of the winter.

US crude dropped US$1.46 to US$59.20 a barrel after hitting a one-month high of US$61.50. London Brent crude fell US$1.47 to US$57.20 a barrel.

Opec's president said on Friday he had proposed to fellow ministers that the oil cartel should keep pumping to rein in prices that have risen 40 per cent this year.

The producer group meets in Kuwait on Monday to chart production policy for the early part of next year and ministers have said repeatedly that they want to keep prices stable for consuming nations readying for winter.

"I made a proposal to the ministers that we should continue with our production level without changing anything," Sheikh Ahmad al-Fahd al-Sabah, also Kuwait's oil minister, said.

The slide in oil prices Friday reverses a week-long rally as a cold spell gripped the major heating markets of the eastern United States.

Forecasters said cold weather could linger for another two weeks, keeping furnaces fired up from the US Midwest to the Northeast, the world's largest heating oil market.

With the prospect of higher prices and spiraling fuel bills, the Bush administration said on Thursday it supported a plan for an extra US$1 billion to help poor families pay for winter heating.

Natural gas futures pulled back after the chilly weather took them to a new record on Friday over US$15 per million British thermal units.

The Energy Information Administration said natural gas stockpiles declined by 59 billion cubic feet of gas last week as the mercury began to fall.

Prices have failed to gain a foothold over the psychological barrier of US$60 as US inventories of crude and heating oil stockpiles stand more than 10 per cent higher than this time last year.

Inventories consolidated through a long autumn as producers and refiners worked flat out to recover from a deadly string of summer hurricanes.

- REUTERS