Oil: Prices steadied, Opec output cut threat supports

NEW YORK - Oil prices steadied on Friday, ending a three-day losing streak as dealers weighed Opec's threat to cut output against healthy supplies of crude and petrol in the United States, the world's biggest consumer.

US crude oil futures settled up 3 cents to US$46.48 a barrel, halting a slide that had shaved US$1.75 off the price since Monday. London Brent crude was up 4 cents at US$43.89 a barrel.

US oil inventory data on Wednesday showed still robust crude oil supplies and higher petrol stocks, easing concerns about meeting demand in the late spring when motor fuel consumption picks up.

Forecasts for warmer than usual February and March weather in the key US Northeast consuming region has shifted the market's focus from a possible winter squeeze to the second-quarter lull, when global demand ebbs ahead of the summer driving season.

With petrol stocks already 4 per cent above year-ago levels and imports running strong, the United States appears poised to avert a springtime petrol price spike for the first time in two years, analysts say.

"The short-term fundamentals are not strong and that's what brought the price off," said Tony Nunan at Mitsubishi Corp. "But if you think a bit longer term, there are still many bullish factors, including Opec's meeting on the horizon and the fact that they've warned about cuts before the meeting. "

Opec's threat to agree to a fresh production cut by telephone if stockbuilds accelerate or prices collapse has made most traders reluctant to sell the market short, particularly with the cartel ready to defend a much higher floor of US$40.

Opec ministers will meet March 16 in Iran.

The Organisation of the Petroleum Exporting Countries cut production by 1 million barrels per day (bpd) from Jan. 1 after prices dipped as low as US$40.25 a barrel in early December. Oil has traded in a US$45-US$50 range for the past month.

A Reuters survey of January Opec production showed cartel output fell nearly half a million barrels per day from the previous month.

However, production from the 10 members with quotas fell only 390,000 bpd, holding 370,000 bpd above the target of 27 million barrels per day agreed at a December meeting, the survey showed.

- REUTERS