KEY POINTS:
Oil prices slid below US$60 a barrel on Tuesday but drew support from Gulf producers, including leading Opec exporter Saudi Arabia, who held out the prospect of deeper output cuts to remove excess supply.
US crude was trading 53 cents lower at US$59.50 a barrel by 1552 GMT. London Brent was 52 cents down at US$59.23.
Prices rose 88 cents on Monday after Saudi Oil Minister Ali al-Naimi said the Organisation of the Petroleum Exporting Countries would take action when it meets on Dec. 14 if world markets remained imbalanced.
Naimi, oil minister of the world's top exporter, noted "very high" stockpiles of fuel worldwide.
Traders said the news flow was keeping prices in a range between US$59 and US$60.
"When it's above US$60, it's sold into. It's quite well supported by the prospect of Opec cuts when it gets below US$59," said Christopher Bellew of Bache Financial brokerage.
Echoing Naimi, another Opec oil minister, Qatar's Abdullah al-Attiyah, said markets were oversupplied.
"If the market is still unbalanced we will make another cut, but I cannot predict now what the quantity will be. The market is still unbalanced," he told reporters.
Iran, Opec's second biggest producer, however, said the producer group would not need to take further action if prices stabilised, while Kuwait's oil minister said the cut of 1.2 million barrels per day (bpd) decided by Opec in October had been enough to stabilise the market.
INVENTORIES
US oil prices have fallen by around 25 per cent since a peak of US$78.40 in mid-July, undermined by hefty stockpiles.
Inventory data from the United States, to be released on Wednesday, was likely to show crude stockpiles rose by a modest 500,000 barrels last week, a preliminary Reuters poll of industry analysts showed .
Apart from the prospect of deliberate Opec cuts, traders said the market was drawing some support from supply disruption in Opec member Nigeria.
Armed militants and villagers invaded an Italian oil production facility in Nigeria on Monday.
Agip, a unit of Milan-based ENI said it had halted 50,000 bpd of production from the flow station at Tebidaba, the latest target in a wave of attacks against the oil industry in Nigeria.
Over the longer term, many analysts say the risk remains of ever higher prices.
In its annual World Energy Outlook on Tuesday, the International Energy Agency warned prices would be driven higher in the coming decades because investment is lagging demand.
It said it considered a moderate oil price to be less than US$60 a barrel.
- REUTERS
