Oil prices retreat amid OPEC output hint

LONDON (AFP) - World oil futures slid yesterday after reports that the Organization of Petroleum Exporting Countries could raise its crude output amid near record-high energy prices, analysts said.

In London, Brent North Sea crude for September delivery dropped 90 cents to 76.74 dollars per barrel in electronic deals.

New York's main oil futures contract, light sweet crude for delivery in September, sank 1.08 dollars to 74.71 dollars per barrel in floor trading.

"The market fell under pressure from comments by OPEC President and United Arab Emirates Energy Minister Mohammed al-Hamli, who said on Sunday that oil's strength and near record prices are of concern and that the group is prepared to pump more oil if needed," Sucden analyst Michael Davies said.

"In addition, the head of OPEC research said that a fair price for producers and consumers is around 60-65 dollars per barrel. This statement was a first indication that the group is prepared to do something about rising crude prices."

OPEC is scheduled to meet on September 11, 2007 in Vienna, home to the group's headquarters.

Under rising demand, geopolitical tensions and infrastructure problems, oil is commanding high prices not seen for nearly a year, luring speculators who are pushing prices ever skyward.

In the past month, crude prices have climbed about seven dollars in London and five dollars in New York.

On Friday, oil prices dipped as traders paused for profit-taking in the heated rally. Still on Monday, Brent was less than two dollars short of its record high of 78.64 dollars per barrel.

The historic peak was struck on August 7, 2006 after a pipeline spill forced British firm BP to close production at Prudhoe Bay, the biggest oil field in the United States.

New York crude has some ground to go before reaching its all-time high of 78.40 dollars per barrel, set on July 13, 2006.

Oil prices had rallied strongly last week after the International Energy Agency raised its 2008 forecast for oil demand by 2.5 percent to 88.2 million barrels a day.

The IEA has called for the OPEC producers' cartel to pump more crude, notably during the ongoing US driving season, when demand for motor fuel shoots higher as American drivers hit the roads for their holidays.

The Centre for Global Energy Studies on Monday added to calls for OPEC to increase output.

"Without more OPEC oil, prices will continue to rise in the coming months," the CGES research group said in a monthly report.

The CGES forecast that global oil inventories are set to fall by 200 million barrels this year, with high prices "no longer being driven by the strength of demand, but by a shortage of supply."