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Oil steadies after heavy pre-Opec sell-off

LONDON: Oil prices ticked a little higher on Thursday, stemming a heavy slide over recent weeks from record heights in anticipation of an Opec deal to raise exports.

North Sea Brent blend futures rose 18 cents to $25.58 a barrel and U.S. light crude was up six cents at $27.52 by midday in London.

Prices peaked at $32 for Brent and $34 for U.S. crude two weeks ago but since have tumbled as Opec's leading nations said they were considering adding extra output.

Venezuelan Oil Minister Ali Rodriguez said on Thursday that ministers preparing for Monday's Opec conference were approaching a common position on output policy.

"We are moving close to consensus," Rodriguez told reporters in Vienna after a series of meetings with fellow producers in the Middle East and Africa.

"I hope the outcome of the meeting will be to increase production, but I don't know by how much," Omani oil minister Muhammed bin Hamed al-Ruhmy said during a visit to Bangkok.

Oman is one of a number of non-Opec nations, led by Mexico, that have supported Opec by promising their own export limits.

The supply curbs expire at the end of the month and producers have come under heavy pressure from the United States to replenish lowly inventories by raising output.

The U.S., which consumes a fifth of the world's oil, on Wednesday approved legislation reaffirming President Bill Clinton's authority to cut off U.S. aid and arms sales to oil cartel Opec and nations that fix oil prices.

The legislation would not give the president new authority to punish Opec, but would encourage him to use his existing powers to confront the producer group over its output policies by reducing or terminating U.S. aid and arms sales.

"We're putting pressure on the Opec nations," said Representative Benjamin Gilman, the New York Republican who sponsored the legislation.

Leading producers, including Saudi Arabia, are believed to favour extra Opec supply of about 1.5 million barrels daily on top of an official limit now of 23 million for 10 Opec nations that cut output last March.

Price hawk Iran prefers less than a million bpd while Libya and Algeria want to postpone any increase for at least three months.

Iran's Opec governor said on Thursday that the recent decline in prices meant the cartel must be cautious.

"There are serious doubts now about falling prices and since demand," he told Reuters from Tehran. "If prices are expected to fall further there are questions about the merit of a production rise."

Officials said Opec now looks likely to steer clear of any effort to legitimise leakage, estimated at about 1.2 million bpd above current supply quotas, as part of any new agreement to raise output.

Dealers said the leakage issue will cloud the final outcome of Monday's meeting.

"Really, whatever Opec says, it will be difficult for traders to assess the true impact of the cartel's meeting until a survey of April's output can be compiled," said Lawrence Eagles of oil broker GNI.

In Washington on Wednesday, the head of the U.S. government's Energy Information Administration said Opec needed to boost production by three million bpd on top of the official 23 million bpd limit.

That would mean adding two million bpd on top of the million or so already being pumped in the form of leakage over official quotas.-Reuters