Oil: Price stems slide on Opec cut talk, Saudi attack

LONDON - World oil prices ticked up from a three-month low on Monday as traders looked for Opec to take action to stem a slide which knocked 14 per cent off crude prices last week.

An attack by suspected Muslim militants on a US consulate in Saudi Arabia and the occupation in Nigeria by villagers of oil platforms in a row over jobs also supported prices.

US light crude by 1740 GMT was trading 41 cents higher at US$42.95 a barrel, climbing away from Friday's US$42.05 trough. Prices fell US$7 last week and are down from a late-October peak of US$55.67 a barrel.

London Brent crude rose 19 cents to US$39.55 a barrel.

In Saudi Arabia Muslim militants stormed the US consulate in the western Red Sea city of Jeddah, reigniting concerns about stability in the world's biggest oil exporter.

It was the first major assault by suspected al Qaeda militants in the kingdom since the attack in May on westerners in the eastern oil city of Khobar.

Last week's price fall raised the alarm among some members of the Organisation of the Petroleum Exporting Countries, which meets on Friday in Cairo.

"There's been a change in sentiment on the possibility Opec could cut output, but of course if prices go up on that expectation it may make it more difficult for them to do so," said Christopher Bellew of brokers Bache Financial.

Kuwait, Iran and Libya said Opec at least should eliminate extra supplies of about one million barrels daily now being pumped above official quotas, or perhaps go further and cut formal quota limits.

"For our part as Kuwait, if this slide will continue as has happened in the last 48 hours, I think we have to ... cut all overproduction," Kuwaiti Energy Minister Sheikh Ahmad al-Fahd al-Sabah said at the weekend.

"The first step is to be committed to what Opec has decided and for members to observe their production quotas," said Iranian Oil Minister Bijan Zanganeh. "In the second instance we should decide what to do for the next quarter."

Opec may be spurred into action by the depreciating US dollar, which has sliced into its purchasing power from non-dollar economies like the eurozone and Asia.

Libyan Oil Minister Fathi bin-Shatwan said the dollar's decline meant Opec should be defending a US$35 price floor for its crudes.

"The dollar is down 33 per cent ... so when the price reaches US$35 we should act," he told Reuters by phone from Tripoli.

But the oil ministers of Algeria and Nigeria, both of which pump higher-value low-sulphur crude, said they saw no need yet to rein in supply.

Last week's price fall came on rising winter fuel inventories and mild weather in the United States, the world's biggest consumer.

Milder-than-normal winter weather cut nearly 500,000 barrels a day off world demand in October and November, Goldman Sachs estimated in a report.

Opec's reference crude basket has already fallen to US$34.53 a barrel, not far above the top of the US$28-US$32 range that Indonesia's Opec President Purnomo Yusgiantoro identified as fair value for the index.

Rising crude inventories mitigated worries about ongoing production outages, including 205,000 barrels per day of Norwegian North Sea output, some 180,000 bpd still closed in the US Gulf and Canada's 160,000 bpd Terra Nova project.

In addition, over the weekend Nigerian villagers seized three oil platforms in the southeastern Rivers state, shutting down 90,000 bpd of the country's 2.5 million bpd production, operators said.

- REUTERS