KEY POINTS:
Oil fell a dollar on Monday, failing to recover from a 17-month low hit last week, as Opec talk of a further supply cut reinforced doubts about the group's existing reduction.
Traders and analysts said Opec's talk of a new production cut lacked credibility given that members have yet to fully implement a reduction of 1.2 million barrels per day that took effect on Nov. 1.
"The market is still waiting to see evidence of Opec trimming with regard to the first cut," said Mike Wittner, analyst at investment bank Calyon.
"Some in the market are sceptical and others simply know that it's going to be several more weeks until we get good data."
US crude futures for January delivery were down 92 cents at US$58.05 a barrel by 1551 GMT, having earlier fallen as low as US$57.97. London's Brent crude was trading 62 cents lower at US$58.37.
On Friday, the expiring December New York crude futures contract dived to a low of US$54.86, the weakest since June 2005.
Analysts said the expiry had exaggerated price moves and the new January front-month contract was back in the roughly US$58-US$62 range that has predominated since early October.
Concern about the strength of economic growth in the world's biggest oil consumer, the United States, as well as relatively mild weather there has further weighed on prices.
The US National Weather Service on Sunday predicted warmer than usual conditions east of the Rockies over the next 10 days, sapping demand for winter heating oil.
FURTHER Opec CUT?
With oil still falling, ministers from the Organisation of the Petroleum Exporting Countries are concerned. Crude in New York is down sharply from a July record high of US$78.40.
Qatar Oil Minister Abdullah al-Attiyah told Reuters on Saturday Opec had "no choice" but to agree another reduction in production when it next meets in December because markets were still oversupplied.
But Iran's oil minister, Kazem Vaziri-Hamaneh, said on Monday Opec was still undecided about making a further reduction at its Dec. 14 meeting in Nigeria.
So far, members have only delivered around half of the 1.2 million bpd reduction agreed with effect from Nov. 1, the group's first supply cut in two years, analysts have estimated.
Some analysts expect prices to move higher in coming weeks, supported by rising heating fuel demand and as the impact of Opec's supply cutbacks filters through.
"I would look for prices to firm," Wittner said. "Really, the main driver is the seasonal increase in demand."
US investment bank Lehman Brothers has issued one of the industry's most bullish 2007 price forecasts, citing capacity constraints and lingering supply risks.
The bank expects US crude to average US$73.50 a barrel in 2007. Its prediction is the third-highest of more than 30 analysts polled regularly by Reuters.
- REUTERS
